The Reserve Bank has warned of a wage-price spiral if unions exploit the low jobless rate to push for higher pay rises to compensate for an inflation rate tipped to peak at a higher than expected 6 per cent.
The analysis, released on Friday, comes after a historic week in which the central bank was caught off guard by signs of faster than expected wage rises, while business leaders warned of a turning point amid a dramatic divergence in pay-expectations.
Jonathan Shapiro writes about banking and finance, specialising in hedge funds, corporate debt, private equity and investment banking. He is based in Sydney. Connect with Jonathan on Twitter. Email Jonathan at jonathan.shapiro@afr.com
