Interest rates could hike as early as June with the central bank scrapping its patience mandate due to faster inflation rises.
Reserve Bank of Australia Governor Philip Lowe has made his biggest signal the bank's timeline to move the cash rate will come earlier, after dropping statements it is willing to hold off until at least the end of the year.
Stronger than expected inflation as a result of rising petrol prices and material constraints is fueling speculation the RBA is on borrowed time, with some economist anticipating first quarter inflation for 2022 will near 5 per cent.
Treasury in last week's budget outlined forecasts that inflation to the end of the current financial year would hit 4.25 per cent.
The RBA in its monthly statement on monetary policy retained the cash rate at 0.1 per cent, flagging a review of key economic figures scheduled to be released in May would influence any further decisions.
This also rules out a rate hike in the upcoming federal election slated for May.
"Higher prices for petrol and other commodities will result in a further lift in inflation over coming quarters, with an updated set of forecasts to be published in May," Dr Lowe said in his statement.
"The main sources of uncertainty relate to the speed of resolution of the various supply-side issues, developments in global energy markets and the evolution of overall labour costs."
The RBA's target band for inflation is 2 to 3 per cent.
Dr Lowe also noted floods in Queensland and New South Wales would contribute to rising price pressures.
Addressing the National Press Club on Tuesday, Labor Treasury spokesman Jim Chalmers conceded material shortages would mean rebuilding in flood impacted areas would take longer.
"Even before the floods you've got difficulty finding tradespeople and you've got very expensive building materials," he said.
"People will be waiting longer than they would like to rebuild their homes and their lives. And that, unfortunately, is a consequence of not training enough people and not dealing with some of the controllable aspects of the inflationary pressures in our economy."
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