The Reserve Bank of Australia is sounding increasingly confident falling unemployment is starting to create shortages of skilled workers that should ultimately force companies into paying higher wages - a key trigger for official interest rate hikes.

In signs of a tentative evolution in the Reserve Bank's thinking, governor Philip Lowe ditched his warnings over recent months that underlying inflation would remain low "for some time", expressed support for signs of a cooling housing market and strengthening investment outlook, and noted growing comfort with the Australian dollar's current level.