Time For Bank Economists To Look In The Mirror Over Unemployment and Inflation

“Can the bank economists this time please stop saying low unemployment is bad news and look in the mirror?” CTU president Ross Wilson said today.

“It is significant that today’s labour market statistics show we have the highest employment level ever recorded in the Household Labour Force Survey, and still one of the lowest unemployment rates in the OECD.”

“Low unemployment and modest wage increases are not driving inflation.  In fact inflation is at 2.5% and falling, even though there are some medium term pressures.”

“In a tight housing market such as we have experienced in the last few years we get very high price rises – a 38.5% rise between 2004 and 2006 - but in a tight labour market, we have been getting only modest wage increases.”

“So banks should look in the mirror. They are borrowing huge sums offshore, driving up the current account deficit and helping fuel house price inflation that is forcing houses way out of reach for workers trying to buy their first home.”