ANALYSIS: The Reserve Bank justified raising rates by claiming there was strong wages growth. Now we know there wasn't
By the end of 2021, annual wages growth had only lifted to 2.3 per cent, with a measly 0.7 per cent increase in the December quarter.
The RBA eventually decided to lift the cash rate at its May meeting, several months after inflation showed signs of being a problem., taking the cash rate from an historic low of 0.1 per cent to 0.35 per cent.Phillip Lowe said the bank"... we stated that over coming months we would be assessing important additional evidence on both inflation and the evolution of labour costs before deciding on interest rates.
During this time, the bank gathered evidence labour costs were rising — which was true, as more workers were hired, total labour costs were rising. Survey data from the National Australia Bank supports this.
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