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Australia's central bank warned in its recent meeting minutes that there is “considerable uncertainty” on how fast wages could increase and how this would affect inflation.
The Reserve Bank of Australia's November minutes stated that wage growth remained low despite a declining jobless rate, which the central bank expects to edge lower. It also showed that policymakers deliberated on subdued consumer prices and pay rewards across the economy amid soaring household debt.
Australia's jobless rate dropped to 5.4 percent in October from 5.5 percent in September.
The RBA kept rates at a record-low of 1.5 percent at its November meeting.
The meeting follows as the RBA trimmed its forecasts for core inflation, which is currently seen moving under its long-term 2-3 percent target band for another two years. "Members noted that there was considerable uncertainty around when and how quickly wage pressures might emerge and about how much of these would add to inflationary pressure," the minutes showed.
Retail price inflation remains low, the RBA noted, as competition in the retail sector had “continued to restrain price rises”.
The RBA expects Australia's economy to expand by three percent over the next few years, in line with earlier forecasts.
The Australian dollar fell 0.2 percent versus the greenback at $0.7535 following the release of the minutes.
