RBA Deputy Governor Hauser says Australia's economy is overall in good shape and there will be a very genuine policy debate at the board meeting, with arguments on both sides

Says:

• A 5% peak for inflation probably looks a little on the pessimistic side; our response depends on size and persistence of the price shock, which is very uncertain.
• Inflation is too high.
• Oil price rise clearly an upside risk to the inflation projection but still in flux.
• Recent data seem to confirm even more decisively that the economy has limited spare capacity.
• Not all domestic data came in as strongly as expected, including consumption.
• Uncertainty over developments in Iran is extremely high.
• Data seems to confirm the economy has limited spare capacity.