The second-largest home lender warned borrowers to brace for an “over tightening” by the RBA that will slow economic growth to almost a standstill and push up unemployment next year.
Two big banks say the Reserve Bank of Australia will raise its peak interest rate significantly higher than previously thought, hitting borrowers hard as it tries to tame soaring inflation.
Asked about other wages claims potentially matching a 7 per cent inflation rate, federal Treasurer Jim Chalmers said pay rises “need to be sustainable so that businesses can afford to pay them when inflation moderates”.Advertisement “The most significant challenge to returning inflation to the target range is containing inflation expectations and inflation psychology,” Mr Evans said.“Such is the emphasis on this issue that it is likely the bank will err on the side of containing these expectations, even at the risk of weighing more heavily on economic activity than might have been their preference under other circumstances.”
“Current high inflation risks a material rise in inflation expectations which could feed into the wage-bargaining process given the very tight labour market,” NAB economists wrote in a report on Friday.Speaking in Brisbane, the treasurer reiterated the best way to boost wages is through productivity gains.Inflation will get worse before it gets better, but it will eventually fall, Dr Chalmers said.
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