RBA Debelle: wages may not increase until unemployment falls further

Joshua Gibson FXStreet

Guy Debelle, the Reserve Bank of Australia's (RBA) Deputy Governor, gave a targeted speech regarding Australia's labour market.

Key highlights

The Australian labour market is in pretty good shape, and Debelle expects employment to continue growing slightly above-trend for the next six months.

The Aussie vacancy rate remains at its highest relative to the labour force.

"Average" economic growth will gradually reduce the labour overhang, which should eventually to "gradual" inflation, wage increases.

Debelle notes that the unemployment rate could fall further than usual before wages finally begin to pick up, although there's a chance the unemployment rate could rapidly decline if the participation rate steadies.

The RBA can't see the economic drag from lower housing prices, effect is "unclear". Despite this, the RBA is still watching housing prices closely.

A lower AUD is almost certainly helping the domestic Aussie economy, but not a huge boost, and it would be helpful if the US Fed wound up pushing the AUD even lower via rate hikes.

Author

Joshua Gibson

FXStreet

Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.

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