Cannot wait to see the RBA try and tackle the labour market

I am looking forward to the RBA being forced to start jawboning the labour market. As Michael Stutchbury observes today, with unemployment heading below 5.2% the RBA will be getting very nervous about wage-price spirals. In particular, Stutchbury (and many others) have argued that anything less than 5% will tip unemployment below the so-called ‘NAIRU’. A couple of years ago Rory Robertson argued that when the RBA 'let' the UE rate fall below 4% it was an experiment to see how far they could go without stoking wage pressures. Well, that experiment ended. The problem for the RBA is that we have just seen a 4.5% increase to the minimum wage and the spectre of old labour market rigidities is beginning to emerge. The Bank loves to whack faceless households over the head. It finds it a little more awkward taking on, for example, banks, canvassing financial sector reform, and highlighting mounting labour market inflexibilities. Why? Well, these constituencies arguably pose much more serious threats to the RBA's nuanced political power. I've discussed this at length in the past. In brief, the Bank has to be vigilant in protecting its own very unusual position in our society. I am generally supportive of this--controlled independence is key. And I have been impressed by the way in which the Bank has of late sought to remedy any mis-steps that it does make. It does not seem to have a tin-ear, and it does listen to criticism. On this note, I think there is room for improving the consistency of its communications strategy (not media management). Here I am talking about policy advocacy. Ric and Glenn could try taking a leaf out of Andy Haldane's book...I will try and come back to Andy later. He must rank as the best central banking speaker in the world.