We had all better hope the coming slowdown doesn’t happen before the full effect of rate rises is felt
One reason that wages have not risen as fast as inflation is that wages are more aligned to the rise of service prices rather than goods .
But if the “price-setting behaviour of firms” means that businesses use the cover of inflation to further raise prices and increase profits, the bank expects workers not to agitate for higher wages.The most, for example, shows that in the last three months of 2022 the weighted average of enterprise bargaining agreements had annual wage growth of just 3.1%.
By the end of last year the average rate of all mortgages had only risen 193 basis points, compared with the actual 300 basis points rise in the cash rate:That leaves more than a third of the rate rises still to fully flow through to all mortgage holders.
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