The outlook is lean for households patiently waiting for wage growth, and especially so for renters.
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The Reserve Bank's latest monetary policy statement tips economic growth around 4.75 per cent over 2021 and unemployment to improve to five per cent by the end of 2021 from 5.6 per cent now.
But there won't be a sudden bonus for workers.
National Australia Bank economist Tapas Strickland said RBA's expectation of wages growth of 2.25 per cent by mid-2023 is key to interest rates being on hold until 2024 at the earliest.
"There is still one-quarter of firms with a wage freeze as at April," he said.
"It is still unclear whether wages growth will pick up to a three per cent pace which the RBA sees as being necessary to sustain inflation within the two to three per cent target band.
He said the majority of firms in 2021 are reporting wages growth of below three per cent.
Shadow treasurer Jim Chalmers said economic recovery remains uneven with wages growth still expected to stagnate for the next two years, following eight years of the weakest period of wages growth in Australia's history.
Besa Deda, chief economist at StGeorge, said for wages to exert more significant upward pressure on inflation, wages growth needs to have at least a three in front of it.
Craig James, chief economist at CommSec, says the Reserve Bank is painting a "nirvana" scenario where economic growth rises sharply, the jobless rate falls markedly but inflation stays below two per cent.
"There are regularly new twists in the COVID-19 era. But the evidence to date suggests that it is right for RBA policymakers to be upbeat."
That's great for businesses, the sharemarket and home buyers with credit to burn through to 2024.
The hot residential property market isn't a concern for the RBA, particularly as house prices are not part its remit, but it will closely monitor credit standards.
Both the RBA and Treasury's best estimate is that the unemployment rate will now need to have a four in front of it to get wages and inflation to accelerate.
Next week's budget will spotlight any differences in opinion in the numbers, and scope for spending.
Australian Associated Press
