Wages pressure sparks cash rate hike

The RBA clearly sees the risks of a wage-price spiral as being real, and a threat to achieving its objective of bring inflation back inside the target range, writes Brendan Rynne.

The Reserve Bank of Australia (RBA) has lifted the cash rate by another 25 basis-points at May’s board meeting on the basis that inflation remains too high and further action was required to bring it back down more aggressively towards the target band of 2 percent – 3 percent. There was a recognition in the statement by Governor Philip Lowe that inflation is now being driven by services price inflation – which is largely being driven by higher wages – rather than goods price inflation. Hous...

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Authors: Brendan Rynne

Published Date: 03 May 2023