RBA cash rate hits 18-year high as public sector wages spiral out of control
Public service wages grew almost double the inflation rate as the RBA raised cash rates to 4.85 per cent.
Australia's Commonwealth public service wages bill jumped 7.2 per cent in the last financial year, almost double the inflation rate of 3.8 per cent at the time. That's a $2.9 billion increase.
State and territory public sector wages grew 6.6 per cent or $12.6 billion. The care economy was hit hardest, with health and social assistance wages climbing 8.5 per cent.
Meanwhile, the Reserve Bank's deputy governor Andrew Hauser warned that public trust in the RBA is weakening. The central bank raised the cash rate to 4.85 per cent on Tuesday, the highest level in 18 years, but Hauser said fewer businesses and households now believe inflation will return to the RBA's 2-3 per cent target within five to ten years.
If businesses and workers lose faith, they will demand higher wages and prices, making inflation harder to tame.
- 7.2 per cent or 2.9 billion dollars
- Commonwealth wage growth
- 6.6 per cent or 12.6 billion dollars
- State and territory wage growth
- 4.85 per cent
- Cash rate
- Andrew Hauser
- RBA deputy governor
Why it mattersSpiraling public sector wages and waning trust in the RBA could trap Australia in a higher-inflation, higher-interest-rate cycle for years.
AustraliaAustralians face higher mortgage payments and cost-of-living pressure as interest rates stay elevated and wage-price pressure persists.
✓ Claims checked against the source and corrected before publish. checked 2 h ago
