RBA cash rate rise Ai Group comment

"The further rise in the cash rate by the Reserve Bank announced today, together with its anticipation that additional rate rises lie ahead, is a sharp reminder of the risks ahead for the domestic economy," Innes Willox, Chief Executive of the national employer association Ai Group said today.

"The lower increase of ¼ of a percentage point this month is a positive sign the Reserve Bank is conscious of the risks of going too far too fast. While inflationary pressures are still building, the Bank's expectation that inflation will track down over the next couple of years is encouraging as is the fact that average wages growth remains moderate.

"Nevertheless, the RBA is clearly wary that the excessive wage rises evident in some areas could become more widespread; get locked into multi-year contracts; and reinforce future inflationary pressures.

"It is critical that all participants in the economy exercise restraint over wages and prices to assist in a more rapid stabilisation of inflation. Over the medium-term the priority must be on similarly shared efforts to lift the supply capacity of the economy," Mr Willox said.

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