Here’s what Deputy Governor Guy Debelle said about weak wages this week:
As we have stated many times, we expect that will lead to a gradual increase in wages growth and, in turn, inflation. There are a number of uncertainties around the extent and timing of the decline in the unemployment rate and the pick-up in wages growth. The recent international experience indicates that the unemployment rate could decline further than historical experience would suggest before we see a material increase in wages growth. But against this, further increases in labour demand may be met more from the pool of unemployed rather than from people not currently in the labour force. That is, the unemployment rate may decline faster than we expect, rather than the participation rate increase further.
And here’s UBS’ George Tharenou with the version that the RBA should have used:
…we continue to expect the pick-up in wages ahead will disappoint the hawks. This partly reflects Australia’s ‘positive labour supply shock’, from booming migration, as well as the international experience that unemployment needs to be (well) below NAIRU for some time before a material lift in wage growth occurs.
The RBA is openly lying to the Australian people. Perhaps it thinks the means justify the end as it aims to head off the Great Australian Housing Crash. Or perhaps it is just intent on saving its own skin from the same.
Either way, these lies are tearing the political economy apart, trashing government after government at the state and federal level as a fatal schism develops between Australian’s lived experience of falling wages and crush-loading versus the rosy balderdash served up by the RBA and government.
Time to tell the truth, RBA.
