The Australian dollar hit a record high against the US dollar on Tuesday, rising above 80 cents US to trade up from the 78 cents it traded at last week.
The dollar was up 0.2 per cent against a basket of currencies.
Australia’s central bank has forecast an unemployment rate of 4.1 per cent this year.
“The Australian economy is at a crossroads,” Governor Mark Carney said.
His comments came after a second reading of the Coalition’s economic stimulus package by the Reserve Bank, which was seen by analysts as an important step towards reaching its target of a 2 per cent GDP growth rate by 2020.
With the economy continuing to struggle, the central bank had earlier said it was “somewhat sceptical” about the economic outlook for the year ahead.
Mr Carney also noted the Federal Government’s decision to end the tax-free savings account.
He said the bank expected the number of Australians who were able to save $50,000 or more to drop by about 2 per-cent a year.
“This is not just a fiscal policy issue but a human one as well,” he said.
“Australians are increasingly seeing the benefits of a more robust economic recovery in our economy.”
The bank has also warned the cost of servicing the federal government’s debt, which stands at $12.6 trillion, would likely exceed the amount of money people could save.
“Inflationary pressures will likely weigh on household spending and employment and could push down the cost to the economy of servicing its debt,” the central banker said.