The official forecast came as the Reserve Bank hardened its talk of higher interest rates declaring in its board minutes released yesterday "higher interest rates would be required" if its economic forecasts came to pass.
It is the first time board minutes have explicitly referred to the need for higher interest rates since December 2007, a declaration that was followed by two successive rate hikes taking rates to their highest point in more than a decade.
The Bank is determined that financial markets get the message that rates are likely to go up and stepped up the rhetoric because it believed they had failed to 'join the dots'.
It is particularly concerned that before the last board meeting the futures market was actually pricing in rate cuts when it should have been pricing in rate hikes.
The market is now pricing in a 40 per cent chance of a rate hike at the Bank's
next meeting in two week's time and a near certainty of a rate hike by Christmas...
The Bank expects the mining boom to push both economic growth and inflation above their long-term trends, something it believes is not sustainable.
It is prepared to act early rather than wait for evidence of above-trend growth or to wait for the official inflation figures due in late October.
It will make a judgment call meeting by meeting rather than be guided by official figures, making a hike at the October 5 meeting a 'live' possibility.
The the Bureau of Agricultural and Resource Economics is forecasting a hefty 26 jump in export earnings this financial year, itself a jump of 6 per cent on the forecast it released just three months ago.
It expects iron ore prices to be 114 per cent higher, coking coal prices to be 63 per cent higher, thermal coal prices 39 per cent higher and wheat prices 20 per cent higher as worldwide wheat consumption exceed production for the first time since 2007.
Boosting wheat production by one-third will be "ideal growing conditions over eastern Australia" with high soil moisture and rapidly rising dam levels along the Murray Darling Basin.
Total earnings form wheat are expected to climb 41 per cent, total earnings from coking coal 41 per cent, total earnings from iron ore exports 55 per cent, and total earnings from gold exports 38 per cent.
Cotton production is expected to jump 69 per cent as the water level in some Queensland and northern NSW dams approaches 100 per cent.
Farm export earnings are set to pass $30 billion for only second time in Australia's history, fuel export earnings are set to pass $70 million, and minerals earnings are set to pass $100 for the first time jumping well clear of the previous peak of $84 billion.
The Bureau is expecting minerals prices to steady from here on with future growth in export earnings coming from increased production.
Published in today's SMH and Age
. Going up, there's a boom on. The Governor says so
. We're earning more without doing more - Reserve
. The index is going up - rates might too