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MNI BRIEF: RBA's Lowe Flags Wages Risk In Inflation Fight

MNI (PERTH)
(MNI) Perth

Welcoming higher nominal wages, RBA Governor again highlights risk of accelerating increases in earnings.

True

Returning inflation back to target required wages not accelerating much more, Reserve Bank of Australia Governor Philip Lowe said Monday, as he apologised to homeowners who took out loans believing rates would remain low until 2024.

Speaking before the Senate Economics Committee, Lowe was pressed on his views about the interplay between wages and inflation after last week being criticised for saying it was "best to avoid" rising wages to compensate for elevated inflation. Although welcoming nominal wage growth, Lowe said the return of inflation to target "will be smoother if growth in labour costs doesn't accelerate too much more," noting aggregate growth in labour costs was consistent with inflation returning to target.

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Returning inflation back to target required wages not accelerating much more, Reserve Bank of Australia Governor Philip Lowe said Monday, as he apologised to homeowners who took out loans believing rates would remain low until 2024.

Speaking before the Senate Economics Committee, Lowe was pressed on his views about the interplay between wages and inflation after last week being criticised for saying it was "best to avoid" rising wages to compensate for elevated inflation. Although welcoming nominal wage growth, Lowe said the return of inflation to target "will be smoother if growth in labour costs doesn't accelerate too much more," noting aggregate growth in labour costs was consistent with inflation returning to target.

Keep reading...Show less