Technical Analysis

RBA’s Ellis says wage growth could be slow to respond to tighter labour market

RBA assistant governor, Luci Ellis, spoke in Canberra earlier

  • Australian wage growth could be slower to respond to a tightening labour market
  • It could be a slower response than in the past
  • This is based on the experiences of other developed economies

ForexLive

She presented an example highlighting a similar situation in the US economy and how wages have been slow to react to the strong jobs market. Well, despite the fact that the unemployment rate has been trickling lower towards the 5% level we’re still not seeing any meaningful jump in wages in the Australian economy this year.

The RBA has previously stated that wage growth of around 3.5% is the “normal” so we’re still quite some way off right now.

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