The Reserve Bank says it expects growth to be close to trend and inflation close to its target for the next year or two, adding that the official cash rate is in tune with current conditions.
"Our most recent assessment was that, with growth near trend, inflation consistent with the target, interest rates about average and an outlook suggesting more of the same, the setting of policy was about right for the moment," RBA Governor Glenn Stevens said.
In a statement to the House of Representatives Standing Committee on Economics, Stevens said that despite the uncertain global economic outlook, progress is being made to stave off another world recession and there have been rays of hope over the past six months from overseas.
He also pointed to structural changes in the economy.
"Perhaps what is most noteworthy about the Australian economy is the way in which the drivers of growth have changed in recent times. The bank has spoken at length before about the terms of trade, and the resulting resource investment boom, which is still building and which will take the share of business investment in GDP to its highest level for 50 years.
"We have spoken also about how, on the other side, household behaviour has changed – people are saving more and borrowing less.
"Spending is growing in line with income, but people are spending their money differently. The retail sector is finding it has to adapt to this changed environment. Some other industries are struggling with the high exchange rate.
"Meanwhile certain service sectors are growing quite smartly. Hence, while the economy overall has recorded 'average' growth, few sectors are in fact experiencing 'average' performance themselves – some are clearly quite weak relative to average, while some others are much stronger."
EU tips double-dip recession in eurozone
The speech comes as the European Union tips a double-dip recession this year in the eurozone.
Overnight, the European Commission said the "unexpected stalling of the recovery in late 2011 is set to extend into the first two quarters of 2012".
But European Union Economy Commissioner Olli Rehn said although growth has stalled, there were signs of stabilisation.
"Economic sentiment is still at low levels, but stress in financial markets is easing.
"With decisive action, we can turn the corner."
Sharemarket flat but Aussie dollar lifts on positive overseas leads
The Australian sharemarket has shrugged off positive leads from better-than-expected US jobs data and a positive German business confidence index to be flat in early trade.
At 1125 AEDT, the S&P/ASX200 was up 0.15% to 4292.5, and the All Ordinaries index was up 0.18% to 4375.4.
IG Markets analyst Stan Shamu said some investors were hesitant that those levels would "trigger a bout of profit-taking".
The banks were mixed but resources stocks were weaker in early trade.
Meanwhile, the Australian dollar was trading slightly higher at $US1.07, lifted by overnight news that the number of Americans seeking unemployment benefits remained at four-year lows.
Crown records 79% rise in first half profit
Casino company Crown has recorded a 79% increase in first-half net profit to $274 million, despite the company highlighting a challenging environment.
Revenue rose 24% to $1.45 billion, while the company announced an interim dividend of 18 cents, 50% fully franked.
"Overall, the results for Crown's wholly-owned Australian casinos, Crown Melbourne and Burswood, were reasonable given the challenging operating environment and the state of the consumer economy," chief executive Rowen Craigie said in a statement.
"The results from Melco Crown Entertainment, our Macau joint venture, continue to improve and were the major contributor to the growth in NPAT (net profit after tax) for the group."
Craigie noted that competition from Singapore is still strong, and noted a drop in consumer sentiment.
"We are still seeing evidence of a softening in consumer sentiment, while the premium markets continue to exhibit strength," Craigie said.
"Some parts of the business continue to be impacted by the ongoing refurbishment programs at both properties."
In the first seven weeks of the year, main floor gaming revenue was up 5.7%, while gaming volumes had been "reasonable".