Australia’s economy is operating at zero growth, yet economists are warning it is running too hot, forecasting it will fuel inflation in the coming quarter That seems implausible, but even if those economists are right, it doesn’t mean the Reserve Bank of Australia should be jacking up interest rates.

Inflation is at 3.6 per cent, sharply down on its peak of 7.8 per cent less than 18 months ago. The present inflation rate is around where, in the middle of last year, the RBA forecast it to be by now, and only a little above the target range of 2-3 per cent.