Bullock Warns Supply Shocks Threaten Global Economy

Reserve Bank Governor Michele Bullock has warned that the world is facing increased supply shocks, which will make it challenging for central banks to navigate their dual objectives of price stability and full employment.

In a speech to the Anika Foundation in Sydney, Bullock noted that the recurring shocks have been occurring against a backdrop of persistently weak productivity growth in Australia, weighing on real incomes and wages for years.

She warned that with continued weak productivity growth, Australia's economy would not be capable of growing strongly without putting upward pressure on inflation, limiting the choices of policymakers in the coming years.

Bullock emphasized that one thing monetary policy cannot do is address Australia's slow productivity growth, and workers will likely experience limited growth in real wages as long as the problem persists.