The Reserve Bank expects wages to grow at their fastest rate in well over a decade this year, but governor Philip Lowe warned there is a risk people may start to want pay increases in line with inflation.
Wages are forecast to grow by 4.1 per cent by June, and 4.2 per cent by December.
Inflation is currently 7.8 per cent, and Lowe said there were concerns that people demand wage increases to match that.
“If we end up in the world I was describing before, where people link wage increases one-for-one with inflation, inflation will persist. And it’ll be more difficult. But at the moment, that’s not happening,” Lowe said.