Low interest rates aren’t enough to boost wages growth: Economists

Original article by Euan Black
The New Daily – Page: Online : 4-Dec-19

With official interest rates left unchanged at 0.75 per cent on 3 December, some economists contend that further rate cuts are necessary for the Reserve Bank to deliver on its employment and inflation targets. However, others argue that interest rates are already so low that further cuts will not do not much to stimulate the economy. Instead, they contend that wage increases are needed, and this in turn requires measures to boost labour productivity. Growth in productivity has averaged 1.1 per cent annually over the last five years, and Treasurer Josh Frydenberg has estimated that lifting it to 1.5 per cent would boost incomes by $3,000 a year.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY

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