Stephen Koukoulas

So that's why wages featured prominently in the governor's commentary last week on the rate hike.

But the...

Good news for inflation, probably not so good news for workers.

The good news is that we're probably going to see a quarterly increase in wages of around about 0.8%, about 3.2% for the year-on-year figure.

So in a sense, if inflation is 2.5%, that would be fine for the workers.

But when inflation is 4% or 4.5%,

you're losing money in real terms.

And that's part of the problem why consumers are feeling so glum.

So it's one of those ones where in this transition period, we probably need to see wages growth around three, three and a quarter percent, no higher, because if we can get through this next six to nine to 12 months with a wages outcomes of three, that will take one element of potential inflation pressures out of the equation for the RBA.

Yeah, and I'm old enough to remember the olden days in, I think it was the 80s, when we had the wages, prices and wages accord.

It was when the union movement with Bill Kelty and Treasurer Paul Keating were in place, and they said, look, we've got to fix this bloody inflation problem.

They had persistently high inflation for such a long period of time, and they decided, in their wisdom, it was actually quite a radical and successful policy to sort of forego a few wage increases.

So the union movement said, look, we'll step back a little bit.

We'll just accept a more moderate wage increase to allow the business sector to maintain their margins without putting up prices, which is inflation.

And it was part of the reason why we saw the inflation stick snap in the early 90s.

And instead of 6% and 7% and 8% inflation, we got down to the 2% to 3% target range.

We've all come to love and enjoy it.

So much riding on it.

Now, I don't lose sleep, but because it's one of these things, it's an evolving analysis that from the last meeting, which is now eight weeks ago, it's a long time since the last RBA meeting, we've had so much news.

And with each bit of news from the international economy and international geopolitics, plus our own domestic data here,