"The Minutes of the November Board Meeting of the Reserve Bank released today and today’s comments by RBA Governor Michelle Bullock are stark reminders of the risks to the inflation outlook and further interest rate rises from strong nominal wage increases at a time when productivity is going backwards," Innes Willox, Chief Executive of the national employer association Ai Group, said today.

"While the surge in immigration and the resilience of the labour market have edged up the outlook for growth, they are also reinforcing the imbalance between domestic demand and supply that will make inflation more difficult to return to below 3 per cent.

"It is critical that governments, employees and businesses exercise restraint in price setting and wage negotiations.

"This is all the more important because the changes the federal Government have already made to workplace relations arrangements and the further changes it is promoting, will deter rather than encourage workplace-based productivity improvements.

"To be fair, the Reserve Bank has been emphasising for some time the importance of revitalising productivity growth. This message cannot continue to be pushed aside," Mr Willox said.

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