RBA, business lobby, scaremonger on wage-price spiral

Reserve Bank of Australia (RBA) governor Philip Lowe appeared before the Senate estimates committee on Wednesday.

Lowe noted that unit labour costs are growing at 3.5% to 4%, and this needs to be reduced to 2% to 3% if the RBA is to return inflation to its target range, which is also 2% to 3%.

Lowe stressed that action is needed to boost Australia’s low level of productivity growth, noting that there has been no increase in the average output produced per hour worked in Australia over the last three years.

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About the author

Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.