The RBA has been clear that it wants to see inflation ‘sustainably’ at target, with wages growth at 3% plus a key input to that assessment. In this Weekly, we take last week’s better-than-forecast labour market data and find that within the RBA’s workhorse Phillip’s Curve model, the RBA should be able to forecast wages growth at 3% y/y at the start of 2023, almost a year earlier than the November SoMP profile. In our analysis we also look at sensitivity to a range of NAIRU assumptions of 3.5-5.0%. The RBA saw NAIRU at around 4-4.5% according to their statements prior to the pandemic. A higher NAIRU sees 3% wage ... (full story)