One very important quote from Dr Phil Lowe's Q&A session, which must presumably reinforce the Bank's hawkish bias, was his statement that, "The unemployment rate gives us another read on how much capacity there is, and based on the experience of the past decade, my judgment would be that we’re almost at what would be considered full employment."
Lowe’s second statement appears to contradict this a little, if one forgets about the fact that he is probably make assumptions about the trajectory of future interest rates. He commented, "Six weeks ago we put out our updated forecasts and there, for the next year or so, we’ve got the economy growing around its trend rate and inflation just being a little above the average or above the medium-term target. I still think that’s a pretty good set of forecasts and so for the next year, I think we’ll be travelling along pretty much close to full capacity but probably just a little bit under it."
