"In his National Press Club address today, the Reserve Bank Governor Philip Lowe made the critical point that, to date, inflation was not driven either by wage increases or by profiteering by businesses but by input cost pressures. If this remains the case, there is a much greater likelihood that only moderate further interest rate rises, if any, will be required to bring inflation back under control," the Chief Executive of the national employer association Ai Group, Innes Willox said today.
"The key take out for businesses, governments, unions and regulators is that a restrained approach to price and wage increases in coming months can materially assist in preventing a self-fulfilling lift in inflationary expectations with adverse consequences for interest rates and unemployment.
"The Governor also pointed to the importance of a return to previous levels of productivity growth if we are to achieve future, sustainable increases in real incomes. The slump in productivity in recent times has capped incomes growth over several years and made businesses and households much more vulnerable to the sudden increase in inflation over the past year and a half. The key ingredients for Australia's economic success are therefore a steady return to lower inflation with a minimum impact on unemployment together with determined action to lift productivity," Mr Willox said.
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