RBA's Ellis: Weak income growth very risky given high debt levels
Reserve Bank of Australia's Assistant Governor
(Economic) Luci Ellis speaking at the ABE Forecasting conference in Sydney
- Says bit more confident about pick up in wages, inflation
- Progress, however, expected to be gradual and to lag other advanced economies
- Central estimate is that NAIRU in australia is still around 5 pct
- Risk unemployment could fall further before stoking wages
- No immediate pick up in wage growth expected, to be gradual thereafter
- Recent enterprise agreements to weigh on wage growth for a while
- Retail competition to work against a rise in inflation
- Household income growth has been particularly weak in australia
- Households could curb spending if weak income growth becomes seen as permanent
- Weak income growth especially risky given high debt levels
Nothing too much in there of surprise - progress on jobs but slow progress on wages is not fresh news. Nor is inflation on the low side of RBA target. Ellis making the point that new wage agreements between unions and firms have lower wage rises than the agreements they're replacing ... yep - slow wage growth indeed.
The Australian dollar had been edging up, following on from its overnight gains ... and is a few tics higher following the headlines. Not much to go on for it really.
Is there a Q&A? Dunno sorry but staying tuned.
Full text: Three Questions About the Outlook