The Reserve Bank of Australia says there is reason to believe commodity prices could rise higher than expected but is concerned about increasing risks in the housing market.
Minutes of the RBA board's March meeting, released on Tuesday, noted "a build-up of risks associated with the housing market", which several economists described as the bank's strongest language yet on the issue.
Board members noted rising property prices in Melbourne and Sydney, the "considerable" number of apartments coming onto the market over the next few years, resurgent growth in investor lending, and household debt rising faster than household income.
"These comments coupled with the RBA's acknowledgement that 'there had been a build-up of risks associated with the housing market' could be interpreted as the bank calling on APRA to further place restrictions on lending to investors," Commonwealth Bank economist Gareth Aird said.
"In other words, watch this space."
Mr Aird expects the cash rate to remain unchanged at 1.5 per cent well into 2018.
The RBA appears optimistic about other aspects of the economy, particularly prices for the country's major exports.
"The fact that the recent increases in commodity prices had been supported by a pick-up in global demand raised the possibility that commodity prices could be higher than expected, in which case the flow-through to the domestic economy could be larger than currently forecast," the minutes said.
Iron ore, which sank to a decade-low of $US38 a tonne at the start of 2016, doubled in value during the year after stimulus measures in China boosted demand from its steel sector.
The price has continued to climb over the past two months, defying analyst expectations of a correction, and in February rose as high as $US95 a tonne.
The RBA board took the view that the direct benefits for Australian households from higher coal and iron ore prices in the second half of 2016 were likely to be limited because of the large proportion of dividends from resource companies that flow to overseas shareholders.
But the wider benefits could last longer than previously thought.
"The recent improvement in global demand suggested that higher commodity prices could be more persistent than previously anticipated," the RBA said.