Reserve Bank of Australia Assistant Governor Luci Ellis cautioned that wage growth may need a longer time to show an upward trend even if the country's unemployment rate reaches the central bank's projected full employment level.
Despite a solid year 2017 that saw around 400, 000 new jobs created, Australia's unemployment rate rose in December to 5.5 percent as more people joined the workforce. Last year, the RBA projected the level of Australia's unemployment rate at which wage growth begins to gain momentum- or non-accelerating-inflation rate of unemployment at five percent.
In a speech in Sydney, Ellis said that since last year, the RBA has not seen a justification to change that broad assessment. But they are still keeping in mind that as the figures are being reached, there is a threat that there will be more room to come down before wage growth gains momentum,
Ellis underlined the three key issues that are plaguing the economy: how much spare capacity it has, how much wage growth and inflation will rise and how resilient will consumption growth be if income growth continues to be weak.