Australia central bank sees only gradual recovery in wages

Australia's central bank on Tuesday cautioned that any pick up in wage growth was likely to be slow and protracted, weighing on household incomes and spending power amid high levels of debt. Reserve Bank of Australia (RBA) Assistant Governor Luci Ellis said policy makers were a little more confident that wages and inflation would eventually turn higher.
However, Australia still had more spare capacity than other developed countries, meaning it would take longer for wages and inflation to accelerate, Ellis told an economics conference. "Our forecasts are for wage growth to pick up from here, but not immediately and then only gradually," said Ellis.
The central bank last week forecast underlying inflation would not reach the floor of its 2-3 percent target band until mid-2019, and only quicken to 2.2 percent by the middle of 2020. That benign outlook reinforced market expectations that any rise in interest rates was also distant, with a first hike not fully priced in until early next year.