With the all important March quarter wage price index (WPI) out tomorrow at 11.30am, a senior Reserve Bank official has warned there’s a chance that unemployment will have to fall further than the central bank has forecast -- 5.25% -- from the middle of next year onwards, in order to get wage rises above the 2% level as measured by the WPI.

The March quarter WPI is expected to come in around 2.1%, unchanged from the December reading. If that happens, it will mean the index will undershoot the government’s budget forecast of 2.5% (which was cut from the very optimistic 2.75% a year ago).