The Reserve Bank of Australia (RBA) on Friday raised its economic and inflation forecasts and added the current mining boom would lift the local economy, raising prospects of a new round of rate hikes.

The RBA also hinted of more policy tightening. It added that consumer prices are seen to jump to 3.25% year-on-year by June, up from a 2.1% annual rise in December, and above the central bank's target range of 2% to 3%.

In a statement, the central bank said the global economy is showing signs of recovering. The Australian economy is experiencing growth thanks to Chinese growing appetite of the country's resources, as well as the positive growth in Japan and Korea.

"In year-ended terms, GDP growth is forecast to be around 3.25 percent over 2010 and to strengthen to around 3.75-4 percent over the remainder of the forecast period (to December 2012)," the RBA said in its quarterly statement.

It added that it sees inflation to decline to at least 3.0 percent over the year to the March quarter -- down from a peak of 4.5 percent in September 2008 -- and would likely ease to 2.75 percent in the near term.

However, the RBA expressed concern that expansion in the broader economy would not be as robust as those in the mining industry due to the appreciation of the Australian dollar which could hurt competitiveness and dampen prospects for the manufacturing and tourism sectors.