SYDNEY, July 8 (Reuters) - Australia’s unemployment would need to fall further and hold in the low 4% levels to lift inflation, an outcome not expected until 2024, the country’s top central banker said on Thursday.
The Reserve Bank of Australia (RBA) has announced massive monetary stimulus since last year to help boost jobs and economic growth.
“It is challenging to determine exactly when the spare capacity in the labour market will be absorbed and, hence, when we can expect a sustained lift in wages growth,” RBA Governor Philip Lowe said in a speech in Sydney.
“While it is hard to be sure, it is likely that the unemployment rate will need to be sustained in the low 4s for the Australian economy to be considered to be operating at full employment,” Lowe added.
The jobless rate is currently at 5.1%.
To help support the economy, the RBA on Tuesday left the cash rate at a historic low of 0.1% at its monthly policy meeting and reiterated it will not raise rates until it achieves its employment and inflation objectives.
The RBA’s forecasts show Australia’s economy will continue to battle excess spare labour market capacity and mild inflation until 2024.
“We still expect the lift in aggregate wages growth will be gradual. We also expect that it will take until 2024 for inflation to be sustainably within the 2 to 3% target range,” Lowe said.
(Reporting by Swati Pandey; Editing by Shri Navaratnam)