The Board expects to increase interest rates further in the period ahead, given the need to establish a more sustainable balance of demand and supply and in the face of a very tight labour market. While wages growth has picked up in Australia from the low levels of recent years, it remains lower than in many other advanced economies.
On the other hand, however, the British government is calling for greater flexibility and room for manoeuvre with respect to the financial sector. Given these points, a continuation of the current regime is not a realistic prospect. The conclusion that can be drawn from this is clear.