Consumer prices are expected to tick higher in 2017, the central bank predicts.
This could further cement the case for no official interest rate cuts this year, given inflation pressures are expected to remain below or within its two to three per cent target range.
"Inflation remains quite low," the Reserve Bank of Australia said in its quarterly Statement on Monetary Policy released on Friday.
The bank's now forecasting a headline annual inflation rate of 1.5 per cent to 2.5 per cent in calendar 2017, and the same for underlying inflation.
This compares to the 1.5 per cent recorded for both measures in 2016.
A pick-up in inflation to around two per cent is expected in early 2017, as employment improves and wages gradually increase.
The RBA cash rate currently sits at a record low of 1.5 per cent, where it has been since August.
Many financial market economists already do not expect the RBA will cut its interest rate before 2018.
