The Reserve Bank board has plenty of reasons to hike interest rates further and members will be gunning for a convincing cool-off in inflation numbers to keep the cash rate on hold longer term.
The minutes from the April interest rate decision confirm it was a close race between another 25 basis point increase and a pause, with the board ultimately holding fire after 10 consecutive hikes to give the 350 basis points of increases a chance to wash through.
The board decided it was worth waiting for key data sources that would paint a clearer picture of the health of the economy, including the quarterly inflation data - due next Wednesday - and employment data, which has since come in hotter than expected.
A full set of updated forecasts from the RBA staff is also expected at the May meeting.
But the board gave ample airtime to the hike case at the April meeting, with "still too high" inflation and a "very tight" labour market central to this argument.
Modelling by RBA staff last month found that with a bit more tightening, inflation is expected to return to the two to three per cent target by mid-2025.
Board members said it would be "inconsistent" with its mandate to "tolerate a slower return to target".
RBC Capital Markets economists Su-Lin Ong and Robert Thompson said this was "a little worrying" and implied further tightening was the more prudent approach.
The bank's economists also pointed to two "new" sources of information fuelling the case for further rate rises - state government wage policies driving public sector wage growth higher, and the faster-than-expected rebound in population growth after COVID-19 slammed borders shut.
Board members said while the migration surge would help ease labour shortages, it would also put pressure on the already-stretched housing market and push rents even higher.
Despite the back and forth at the April meeting, Ms Ong and Mr Thompson said the decision to pause ultimately underscored the RBA's "dovish hue".
"It is reluctant to hike much more, is prepared to tolerate higher inflation compared with its global counterparts and even if, as it suggests today, this is inconsistent with its mandate," they wrote in an analysis.
"The onus remains on the data to surprise to the upside and mixed data will not be enough for further tightening."
The bank has so far absorbed a strong employment report - with the jobless rate sticking at 3.5 per cent - as well as robust business surveys, weak signs of recovery in consumer confidence and a modest uplift home prices.
While the RBA has made it clear there may be one or more rate hikes to come, economists from one of Australia's biggest consultancy firms believe the last two hikes were "unnecessary".
Deloitte Access Economics researchers said the last 50 basis points of increases had only served to dampen Australia's growth outlook and could prompt a "consumer recession".
The report found that higher mortgage repayments and elevated costs were already outstripping the money many households were bringing in.
Against the backdrop of household pain, a lull in home building and a shaky global environment, the firm's economists have revised their expectations for economic growth down to 1.5 per cent in 2023 and 1.2 per cent in 2024.
