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

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.

Lowe also offered an apology to Australian's who took out a mortgage on the belief that rates would be kept at 0.1% until 2024. "I'm certainly sorry if people acted on what we’d said and now regret what they had done”.