Investors suspect interest rates will stay on hold for a long time to come: Interbank futures are not fully priced for a hike until September 2019.

A bumper run in exports was the main driver of the first-quarter acceleration, accounting for half the growth in GDP, while government spending and non-mining investment also helped.

Household consumption - which accounts for around 57 per cent of GDP - contributed 0.2 percentage point to growth in the quarter.

However, there was caution around reading too much into the quarterly numbers.

"While recent data does point to an acceleration in March-quarter GDP growth, there have been numerous growth spikes in Australia to around 1 percent, quarter-on-quarter, in recent years only to be followed by a cooling again," said Shane Oliver, chief economist at AMP.

"Uncertainty remains around the outlook for consumer spending: Household debt is high, banks are tightening lending standards, wage growth and inflation remain low and will pick up only gradually, and house prices are falling," Oliver added.

Household spending on insurance, transport, health care and utilities grew the most while spending on alcoholic drinks, cigarettes and eating out dropped, the data showed.

Some of that spending had to be funded by reduced saving, with the savings ratio falling to 2.1 per cent from 2.3 per cent. 

Reuters