The Australian economy is steadily improving, particularly in the business sector with real business investment starting to contribute to growth, which should be sustained through 2018 by the strengthening global economy. Inflation remains below the RBA’s target range of 2-3%, with wages hardly responding to the apparent gradual tightening in labour markets due to persistent structural trends in those markets. House price inflation has eased in response to recent tighter macroprudential regulation of housing finance. This is good insofar as that inflation was due to speculation and not to a fundamental excess demand for housing services - however a concern is that dwelling approvals have fallen sharply in December 2017, which should moderate future supply if this fall persists. In the current scenario, there is no need to change the cash rate. Should wages and thus price inflation begin to move significantly later this year or in 2019, a cash rate response may become necessary.