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Australia wage growth slows, gives scope for rate cuts

Published on Feb 20, 2013 10:00 AM

SYDNEY (REUTERS) - Australian wages grew at the slowest pace in two and a half years last quarter, a turnaround that should help contain inflation and provide scope for further monetary easing if needed.

Wednesday's data from the Australian Bureau of Statistics showed annual growth in total hourly rates of pay dropped to 3.4 per cent in the fourth quarter of last year, from 3.7 per cent the previous quarter. That was under forecasts of 3.5 per cent and the lowest reading since mid-2010.

The outcome will provide comfort to the Reserve Bank of Australia (RBA), which is counting on a moderation in wages to help keep inflation within its target band over the next couple of years.

"This is a benign outcome," said Mr Michael Turner, an economist at RBC Capital Markets. "The data are very much in the 'affords scope to ease' category, though do not make such a move more likely in our books."

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