In a speech, RBA Deputy Governor Michele Bullock noted the economy needs to “grow at a below trend pace for a while” to bring demand and supply into better balance. Only that will give “the greatest chance of securing sustainable full employment into the future.”
Bullock explained, “For monetary policy… We think of full employment as the point at which there is a balance between demand and supply in the labour market (and in the markets for goods and services) with inflation at the inflation target.”
“In recent months, the balance between labour demand and supply has improved somewhat,” she noted. “Nevertheless, the labour market remains tight.”
Also, “for the first time in decades, firms’ demand for labour exceeds the amount of labour that people are willing and able to
“At the same time, with demand for goods and services high relative to the economy’s capacity to supply those things, inflation is well above the 2–3 per cent target range.”
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