(Bloomberg) -- The Reserve Bank of Australia sounded an optimistic note on the economy, while maintaining that faster wages growth and inflation will take some time and the first interest-rate increase is unlikely before 2024.

“A rapid trajectory of recovery from the recent setback seems increasingly likely,” the central bank said Friday in its quarterly update of economic forecasts, predicting wage growth will accelerate to 3% and inflation hit the 2.5% midpoint of the RBA’s target by end-2023.

“Depending on the trajectory of the economy at that time, the board judges that this outcome could be consistent with the first increase in the cash rate being in 2024,” it said.

The central bank’s assessment represents a further push back against market pricing for a tightening cycle to begin next year. Australia’s A$2 trillion economy ($1.5 trillion) is expected to have contracted last quarter after an outbreak of the delta variant of coronavirus forced authorities to impose strict lockdowns along the populous east coast. 

But strong vaccine take-up has allowed for an earlier-than-expected reopening in Sydney and Melbourne, bolstering consumer and business confidence. Record-low rates and fiscal support have also boosted domestic demand. 

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