<
https://theconversation.com/profits-push-up-prices-too-so-why-is-the-rba-governor-only-talking-about-wages-185688>
"Reserve Bank of Australia governor Phillip Lowe has invoked memories of the
1970s, warning wage growth must be restrained to contain Australia’s surging
inflation.
In the 1970s, Lowe said last week, “we got into trouble because wages growth
responded mechanically to the higher inflation rate”. Now, with inflation above
5%, and tipped to reach 7% by the end of the year, he wants want people to keep
in mind an “anchoring point” for wage growth of 3.5%.
That 3.5% represents the central bank’s long-standing judgement that wage
growth equal to the RBA’s ideal inflation target (2.5%) plus productivity
growth (typically more than 1% a year, currently above 2%) is economically
sustainable.
Lowe says “if wage increases become common in the 4% and 5% range” that will
make it harder to get inflation back to his target. But that prospect seems so
remote it’s a wonder why he focused on it. Particularly when he said nothing
about about the role of ever higher profits on increasing prices."
Cheers,
*** Xanni ***
--
mailto:xanni@xanadu.net Andrew Pam
http://xanadu.com.au/ Chief Scientist, Xanadu
https://glasswings.com.au/ Partner, Glass Wings
https://sericyb.com.au/ Manager, Serious Cybernetics
