The Shadow RBA is out with its usual hawkish preening today:
Covid-19, Weak Wages Growth, and Persistently Low Inflation: Cash Rate Should Remain Steady, Just
Fear about a global coronavirus pandemic are already taking their toll on world financial markets and are likely to impose significant economic costs on the Australian economy, should the crisis worsen. Tepid wage growth, a slight increase in the unemployment rate and an inflation rate that remains below the Reserve Bank of Australia’s official target range of 2-3% all point to economic weakness. The RBA Shadow Board’s conviction that the cash rate should remain at the historically low rate of 0.75% equals 49%, while the confidence in a required rate cut equals 46% and the confidence in a required rate hike 6%.
Based on ABS figures for January, the seasonally adjusted unemployment rate in Australia ticked up, from 5.1% in December to 5.3%. This is due to the labour force participation rate rising 0.1 percentage points, to 66.1%, as total employment increased by 13,500. According to the latest quarterly data, a key variable for gauging inflationary pressures as well as the outlook for consumption expenditure, real wage growth remains worryingly low, at 0.4% year-on-year.
