RBA’s Elli: wage growth and inflation to pick up - TDS

RBA Ellis’ speech “The Current Global Expansion” talked about the turning point in the global economy mid last year and RBA’s assumption that this expansion would continue and on this basis, the forces of supply and demand should ultimately see wage growth and inflation pick up, explains the analysis team at TDS.

Key Quotes

“The problem is timing. She comments that in the instance that growth is stronger but inflation stays low (technology could drive this), this will require monetary policy to remain expansionary for longer. The following comment was rather interesting: “There are always uncertainties about the data. There are times when you have to be willing to make a call, because waiting until you are 100 per cent sure things have changed means waiting too long.” No reference is made to hiking or cutting here, but the implication here is that the RBA’s forecasts factor in a positive global outlook. This is probably consistent with what the BoE and BoC are thinking too – otherwise we wouldn’t have heard hawkish tones from them.”