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The RBA doesn't sound very confident about the outlook for Australian wages

Tuesday, May 15 2018
The RBA doesn't sound very confident about the outlook for Australian wages

For a central bank that needs faster wage growth to help achieve its policy objectives, the Reserve Bank of Australia (RBA) doesn’t sound all that confident it will happen. That was clear to see in a speech delivered today by RBA deputy governor Guy Debelle, in which he all but admitted the risks for the bank’s wage growth outlook are currently to the downside.

“The experience of other countries with labour markets closer to full capacity than Australia’s is that wages growth may remain lower than historical experience would suggest,” Debelle said in a speech delivered to the CFO Forum in Sydney. Clearly, Debelle has been keeping a close eye on wage developments in the likes of the United States, United Kingdom, New Zealand and Japan where unemployment has fallen below levels where it typically leads to faster wage and inflationary pressures, known as the non-accelerating rate of unemployment, or NAIRU, for short.

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