Lowe: Wages key to Australia’s inflation prospects

“The RBA is closely watching a spike in inflation,” said the Reserve Bank of Australia Governor Philip Lowe while speaking before a conference hosted by the Universidad de Chile on early Friday morning.

The policymaker has added that he did not think the rise would be sustained unless it led to sustainably higher wages growth.

Main Quotes
– Whether it turned into a permanent lift depended on whether it fed through to the labor market.

– Is it going to reset expectations about what type of wage growth people should get, or will the spike dissipate and we will go back to the type of labor market outcomes we’ve seen before the pandemic?

– So there is quite a lot of uncertainty around that issue, but we are watching very carefully.

– Policymakers broadly understood why the spike in inflation was occurring.