Australia's economy is like a car exceeding the speed limit. Or is it an inflating balloon, squeezing up against the inside of a box?
Fresh data in the coming week will give the central bank more of an idea about whether it needs to raise interest rates again or if its February hike was enough to get the economy back on an even keel.
While the resurgence in inflation that forced the Reserve Bank's hand was due to a number of factors, Governor Michele Bullock said, the speed at which consumer spending and business investment surged in the second half of 2025 caught the board off guard.
"Private demand looks to have increased more strongly over the latter part of last year than we were expecting," she told a parliamentary committee on Friday.
Consumer spending, housing in focus
How resilient household spending remains will be put to the test in figures released by the Australian Bureau of Statistics on Monday.
Consumption grew faster than expected in November, partly boosted by Black Friday sales, before consumer confidence slumped amid fears of more rate hikes.
Another sign of the economy's strength has been a rebound in housing investment, which has been pushing up dwelling prices.
The Australian Bureau of Statistics' release of credit growth figures on Wednesday will indicate whether banking regulator APRA's new restrictions on risky lending have had any effect on dampening investor demand.
