Price pressures could become embedded if workers demand wage rises to compensate for high inflation outcomes and firms index their prices to the cost of living
About 140,000 Australians are expected to lose their jobs by the end of next year as Reserve Bank of Australia deputy governor Michele Bullock warns the unemployment rate needs to increase to 4.5 per cent to tame inflation.
RBA deputy governor Michele Bullock: “Employment is above what we would consider to be consistent with our inflation target”.While high interest rates have caused some cooling in the labour market, the unemployment rate remains low byand Ms Bullock said it was still extremely challenging for many firms to find workers.
The non-accelerating inflation rate of unemployment is the jobless rate at which inflation is neither rising nor falling. It is the central bank’s main gauge of full employment. Among the reasons cited for the cash rate rise was the risk that high inflation outcomes could become self-sustaining if wage demands were to become indexed to past rates of inflation.
Unlike previous minutes, there was no reference to the need for further interest rate rises, which some economists took as a dovish sign about the outlook for the cash rate.
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