But looking further ahead, in an economy with reasonably modest amounts of spare capacity, the terms of trade near an all-time high and the likely need to accommodate the largest resource-sector investment expansion in a century, it is pretty clear that the medium-term risks on inflation lie in the direction of it being too high, rather than too low.
Last time we met, I explained it was important that monetary policy not overstay a very expansionary setting once it was clear that the danger of a really serious downturn in economic activity had passed. At that stage the Board had lifted the cash rate three times in late 2009.