By MarketWatch LOS ANGELES (MarketWatch) -- The Reserve Bank of Australia on Friday raised some of its economic-growth forecasts, offering a buoyant medium-term outlook and repeating its intention to hike interest rates further if necessary. In its quarterly monetary policy statement, the RBA said its "central forecast is for the economy to grow at around 3.25%-3.5% in both 2010 and 2011." Specifically, the central bank raised its gross domestic product growth forecast for June 2011 to 3.5% from 3.25% previous and its June 2010 forecast to 2.5% from 2.25%, according to comparisons with the previous statement, as reported by Dow Jones Newswires. The RBA said housing construction has turned around and "is also now providing a boost to domestic demand," and that "stronger employment data have helped lift consumer confidence which, together with a recovery in household wealth, has supported consumer spending, despite the fading of the effects of the earlier cash payments to households." In terms of inflation, the central bank said it expects price rises "to continue moderating in year-ended terms to reach a low of a little under 2.5% in the second half of 2010, before rising a little thereafter." It kept the door open for further policy rate hikes, saying that "if economic conditions gradually strengthen as expected, it is likely that monetary policy will need to be adjusted further over time." The RBA surprised markets Tuesday by holding its policy rate unchanged at 3.75% after a string of increases at its previous three meetings. After a spate of better-than-expected economic data in recent weeks, analysts had widely expected a rate increase of 25 basis points.

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