RBA says rate change unlikely
The Reserve Bank will not increase rates any time soon.
RBA governor Philip Lowe told leading business figures this week that recent market volatility would not have any impact on the growth outlook for Australia, which will sit “a bit above 3 per cent over the next couple of years”.
He continued to call for higher wages to help boost the Australian economy.
“It is likely that the next move in interest rates in Australia will be up, not down”, but the RBA “does not see a strong case for a near-term adjustment in monetary policy,” he said.
“We are still some way from what could be considered full employment, and our central scenario for inflation is for it to remain below the midpoint of the medium-term target range for the next couple of years.”
He clearly stated that bigger pay increases are needed to help the economy, saying “some pick-up in wage growth would be a welcome development”.
“Indeed, a lift in wage growth is likely to be necessary for inflation to average around the midpoint of the 2-3 per cent medium-term inflation target,” he said.
“Even if productivity growth were to be around the average of recent years, a faster rate of wage increase should be possible.
“The slow growth in incomes has weighed on spending, including by making it harder for some households to pay down their debts.
“Stronger growth in real wages would also boost household incomes and create a stronger sense of shared prosperity.
“Ensuring that our public finances are on a sustainable footing is important to ensuring that we have similar flexibility in the future,” he said.
He did not comment on the corporate tax debate.