Weaker labour market will keep a lid on wage growth

While the second consecutive fall in employment in January may partly reflect seasonal distortions, there can be little doubt that the labour market is rapidly losing momentum. The unemployment rate has already risen faster than the RBA had anticipated, which we expect to continue. Accordingly, we think that wage pressures won’t become quite as strong as the Bank expects and still expect monetary policy to be loosened by the end of this year.