According to the latest forecasts from the Reserve Bank of Australia (RBA), the country’s economy is set to grow slightly faster than previously predicted. The central bank’s projections for gross domestic product (GDP) growth improved by a quarter point from the November statement, with the expected range of growth for full-year 2014 between 2.25 percent and 3.25 percent.

With the midpoint of that range at 2.75 percent, that means the economy could produce growth in line with Australia’s long-term trend of 3 percent annual growth. By 2016, growth is expected to accelerate to an above-trend pace–between 3 percent and 4.25 percent.

A significant component of the latest prediction is the further decline in the Australian dollar–around 5 percent–since the RBA’s last statement in November.

The central bank is admittedly uncertain as to the source of the sudden rise in inflation during the fourth quarter, as a lower exchange rate doesn’t usually flow through to the economy so quickly. The Australian dollar fell below parity with the US dollar in May 2013 and currently trades near USD0.896, down about 18.5 percent from its cycle high in mid-2011.

While the decline in the aussie may have already spurred inflation in the price of imports, the RBA also notes that slower growth in labor costs has yet to be reflected in domestic goods. Regardless, inflation, as measured by the consumer price index (CPI), is expected to be between 2.25 percent and 3.25 percent in 2014, which puts it toward the upper limit of the bank’s targeted 2 percent to 3 percent range.

That brings us to the other component of the bank’s somewhat rosier outlook: historically low interest rates. The RBA has been on a rate-cutting cycle since late 2011, and its benchmark short-term cash rate currently stands at 2.5 percent, an all-time low.

Given the near-term jump in inflation, the RBA believes that the cash rate will likely remain at current levels for about a year. Should higher inflation prove to be fleeting, however, then some economists believe there could be another rate cut during the second half of the year.

The bank has said that it can take at least 18 months for the effects of monetary easing to be felt throughout the broad economy. For now, policymakers are keen to find pockets of growth among the non-mining sectors. And they’re hopeful that low rates coupled with a decline in the exchange rate will help other industries find their footing.

Although the country’s resource boom has peaked, as reflected by the decline in mining investment, a number of projects that were initiated during that period are finally coming on line. That means that even as growth in resource-sector investment wanes, production is expected to continue climbing, which should mean export activity from mining and energy products will continue to make meaningful contributions to GDP.

Meanwhile, the RBA has acknowledged that non-mining investment remains weak, though there has been some improvement in sentiment and business conditions. However, it will take more than a slightly optimistic outlook to translate into job growth and business investment.

Recent promising data from the retail sector have offered a kernel of hope. But among the non-mining industries, real estate is the sector most likely to drive the economy in the near term, despite concerns that a bubble could be forming.