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Why the RBA plans to keep rates low for years – The Australian Financial Review
The RBA has realised the unemployment rate has to fall much further to generate wages and inflation pressure.
Crucially, the RBA insists it will no longer increase interest rates if it merely thinks inflation is on track to move into the target range in the future.
(As an aside, if the RBA gets worried about surging house prices and risky credit growth, before considering raising interest rates the central bank will push the prudential regulator to put speed limits on home loans.)
All else equal, nominal wages will need to grow at an annual pace of 3-4 per cent for inflation to be 2-3 per cent (assuming…
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