RBA: Watching the pace of rate hikes after September

 The Australian Bureau of Statistics released data on the 17th, the data said that the April-June quarter wage index rose 2.6% year-on-year. In addition, the consumer price index (CPI) rose by 6.1% year on year, the highest increase in 21 years. After the revision, the core CPI rose by an average of 4.9% year on year, surpassing the central bank by 2-3%. However, wage growth has not kept pace with rising prices, putting downward pressure on real incomes. The Fair Work Commission (FWC), an independent adjudicator, has increased the minimum wage for the current financial year (July 2022 to June 2023) from 2.5% to 5.2% (hourly wages: $20.33 → $21.38). The increase in wages would be the largest since 2006, given soaring energy prices and a strong labor market that has led to a sharp rise in the cost of living. Since the minimum wage setting has the force of law, if wages rise after July, real income is expected to increase. But as wages rise, upward pressure on prices may further increase.

  In its quarterly monetary policy report released on the 5th, the Reserve Bank of Australia (RBA) raised its inflation forecast for the April-June 2024 quarter. The CPI growth for the October-December 2022 quarter was revised up to 7.75% from 6.0% in May. CPI is expected to peak in the October-December quarter of 2020 and moderate from 2023. The CPI is expected to return to the central bank's target ceiling in the newly announced October-December 2024 quarter. The minutes of the Governing Council meeting released on the 16th (2nd) indicated that it was necessary to further raise interest rates to curb inflation expectations, but did not pre-set a policy path to stabilize the economy. July employment data released today showed that the unemployment rate rose by 0.1 percentage point month-on-month to 3.4%, maintaining the lowest level in 48 years, with external declines. At the Sept. 6 board meeting, the market began to cut interest rates from 50 basis points to 25 basis points, but there is still a view that the policy rate will rise above 3.0% by the end of the year.