Productivity must rise to cut inflation easily. The Albanese government has been hoping that falling inflation would allow interest rates to come down. The Reserve Bank, on the other hand, says inflation reductions have stalled, so interest rate cuts are off the agenda for now.

The bank only gets inflation down to target in 2026 by assuming that productivity starts rising again. Yet over the past year, output per hour worked was flat. There seems little reason to expect much change.