Managing director of EQ Economics and economic adviser to Judo Bank, Warren Hogan, has written an article in The AFR arguing that “Australia doesn’t have an inflation problem”. Hogan has also argued that the RBA should not raise interest rates until wage growth has rebounded:
Australia doesn’t have an inflation problem. Higher wages growth is required to sustainably achieve 2 per cent inflation. Wages growth needs to be more than double the recent pace to qualify as an inflation problem.
Higher wage growth is also required to reduce financial stability risks, and it is essential for a balanced economy. To counter rising nominal wages, policymakers and business will need to contain real unit labour costs through sensible policies that reduce non-wage labour costs and through investment that boosts productivity.
