Philip Lowe has warned that Australia’s dismal productivity performance will make it harder to bring down inflation and risks sending living standards backwards
Labour productivity, represented by the level of output produced per hour work, is the same today as it was three years ago, after falling 4.2 per cent since its peak in March last year.
“This is something that the central bank can’t really do very much about with productivity growth, but it certainly affects our job a lot and I’m sure it’s affecting your job as well.”after the RBA shocked markets by increasing interest rates 0.25 percentage points to 3.85 per cent. Economists had generally expected the cash rate to remain on hold.
Despite the shock interest rate decision on Tuesday, Dr Lowe conceded the RBA board had a relatively gradual appetite for getting inflation back to target compared to other central banks.
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