RBA Sounds Warning on Productivity Growth
RBA Governor Michele Bullock sounded a warning on Australia's economic growth, citing sluggish productivity as a major hindrance to achieving the bank's inflation target. According to Bullock, weak productivity growth is leaving Australians out in the cold, with the economy unlikely to grow without putting pressure on inflation.
The Reserve Bank has been closely monitoring inflation rates, which rose 4% for the 12 months to May. Underlying inflation also jumped from 3.4% in April to 3.6% in May. Bullock emphasized that the bank's primary focus is on maintaining low inflation and supporting full employment.
The RBA Governor noted that further rate hikes are still possible, saying 'the board is prepared to act as required, including raising the cash rate further if needed.' She also expressed concern about supply shocks, which she believes will continue to impact the global economy. The bank's priority is to address inflation, and Bullock stated that 'the longer inflation is out of target, the more concerned the board becomes.'