Unfortunately, one of the consequences of a world in which many more people want to save than to invest is that the return to saving falls, particularly on savings held in low-risk assets such as bank deposits. One other change to the global monetary transmission mechanism that has echoes in Australia is the behaviour of wages.
As in many other countries, wage growth in Australia has been quite subdued and lower than would be suggested by most of our standard models. The latest reading of the wage price index shows an annual increase of 2½ per cent and the earnings per hour measure from the national accounts is lower still (Graph 12).