The Reserve Bank has forecast strong economic growth for Australia in 2018 and 2019, but expects interest rates to remain steady for some time yet.

In its 70-page quarterly statement on monetary policy, the RBA lowered its inflation expectations.

The RBA now sees underlying inflation slowing to 1.75 per cent by the end of this year — down its earlier prediction of 2 per cent.

The reason for the downgrade was due to one-off cuts in government-administered prices like electricity and education.

Inflation has consistently undershot the RBA's target since early 2015 and was the major reason for the central bank cutting interest rates to the record low 1.5 per cent in August 2016 — where rates have been since then.

The RBA also expects growth in the nation's $1.8 trillion economy is expected to accelerate to 3.25 per cent — this year and next year — before easing back to 3 per cent in 2020.

However, Capital Economics' Paul Dale believes the RBA's outlook is too optimistic.

"We don't think the economy will perform as well as the RBA hopes," he said.

"Our view is that the weak housing market will mean that GDP growth is closer to 2.5 per cent than 3.25 per cent."

Slow wages growth to persist

The bank also expects the unemployment rate to hover around current levels of 5.5 per cent this year, before easing to 5.25 per cent by mid-2019.

Full employment (around 5 per cent unemployment) is not expected to happen until the end of 2020.

"The Reserve Bank Board has for some time been of the view that holding the cash rate steady at 1.50 per cent would support the gradual progress being made on unemployment and inflation, with steady monetary policy promoting stability and confidence," RBA governor Philip Lowe said.

"Given the gradual nature of the improvement … the board does not see a strong case to adjust the cash rate in the near term."

Subdued wages growth, at around 2 per cent, is also adding downward pressure on consumer prices despite a solid run of jobs growth since 2017.

The bank noted there was uncertainty about the amount of spare capacity in the market and the level of the unemployment rate that is consistent with stable inflation.

Excess capacity in the labour market tends to put downward pressure on wages growth.

"Although the unemployment rate may fall to 5 per cent, we don't think wage growth will rise enough to lift underlying inflation above 2 per cent," Mr Dales said.

Rates not moving any time soon

The RBA also highlighted risks to global growth from rising trade protectionism without mentioning US President Donald Trump directly.

The bank noted uncertainties around tit-for-tat tariff measures could "materially weaken the investment outlook and may weigh on confidence and financial market conditions more generally".

Following the release of the RBA's statement, Westpac's chief economist Bill Evans' opinion was: "The RBA remains firmly on hold and looks to remain so throughout 2019."

Mr Dales was more optimistic in comparison, and expects the next RBA rate hike will not be until November, or later.

Similarly, NAB's market chief economist Ivan Colhoun said: "There's nothing in today's statement that suggests the RBA is especially closer to moving rates."

"We're left monitoring the [slow] progress toward stronger growth, lower unemployment and higher wages and inflation."