In NAB’s latest Forward View webinar, attended by MPA last Thursday, Auld discussed how Australia looks set for a soft landing – a scenario where inflation is brought under control without derailing the labour market.
“There are a couple of important dynamics underlying this forecast,” explained Auld.
Firstly, there is a transition underway in Australia’s growth profile, with private sector activity – particularly household consumption – beginning to lead the charge in place of public sector activity.
“We’re seeing households regain some spending power as real disposable incomes lift,” Auld said, pointing to falling inflation and 75 basis points worth of cuts to the cash rate this year.
“Those two things together, plus the fact that employment growth has remained pretty solid this year, has basically meant that households’ gross real disposable income has started to pick up… that’s all a good thing for the domestic economy,” said Auld.