Reserve Bank "shadow" board warns of housing bubble risks; says rates kept too low for too long

While it's close to certain that the cash rate will be held steady at the historic low of 2.5 per cent, there will be a full agenda given the improving face of Australia's economy.

Headline inflation in the most recent quarter was back up to 3 per cent annualised - right at the top of the RBA's target zone of 2 to 3 per cent "over time".

That's normally enough to put the RBA's inflation hawks on a rate rise warfooting.

But also the official jobless rate looks set to remain at 6 per cent when the ABS reveals the official July numbers on Thursday.

The trend towards a "glass half full" economy is underscored by positive private data out today on inflation and jobs, capped off by a 0.6 per cent increase in July retail sales.

However, the elephant in the RBA boardroom tomorrow remains Sydney's booming property market and rising concerns that a dangerous property bubble is building.

The Reserve Bank "shadow" board - a project run by the Australian National University - says inflation and rising asset prices will force the RBA's hand over the next six months.

The former RBA board member Professor Warwick McKibbin is a key member "shadow" board and I spoke to him earlier today.

Here's my preview of tomorrow's RBA board meeting which includes an interview with Professor McKibbin.