Possible RBA relief

The RBA can breathe a sigh of relief as wages growth remains in line with expectations, reducing the pressure for additional rate hikes.

The recently released official Wage Price Index (WPI) from the Bureau of Statistics reveals that wages have experienced growth that closely aligns with forecasts. In the March quarter, pay packets increased by 0.8 percent, while over the year leading up to March, there was a 3.7 percent rise. These figures are consistent with economists' projections, who had anticipated a 0.9 percent increase for the quarter and a 3.6 percent increase over the year.

The RBA had been under scrutiny, with speculations that they might need to implement further rate rises if wages exceeded expectations. However, with wages growth remaining in line with forecasts, the immediate pressure on the RBA to raise interest rates has been alleviated.

This outcome aligns with the earlier comments made by Gareth Aird, the head of Australian economics at the Commonwealth Bank, who suggested that if wages growth surpassed 1 percent and the April labor force survey indicated stronger-than-expected results, the RBA might consider increasing rates in June. Nevertheless, with wages growth close to expectations, the need for immediate rate rises is lessened, providing some respite for the RBA.