Reserve Bank of Australia governor Philip Lowe (Image: AAP/Joel Carrett)

Australia's lack of wages growth is the biggest impediment to any kind of normalisation of monetary policy. That's the view of the Reserve Bank, articulated by governor Philip Lowe speaking at the National Press Club this week, once again laying out the path to any lift in interest rates from their current minimum:

Before increasing the cash rate, the Board wants to see inflation sustainably within the 2-3% target range. Meeting this condition will require a tighter labour market and stronger wages growth than we are currently forecasting. It is difficult to determine exactly when this condition might be met but, based on the outlook I have discussed today, we do not expect it to be before 2024, and it is possible that it will be later than this.

Wages growth is also the key to a broader economic normalisation -- to the extent that there will be any post-pandemic normal; to the extent that the Australian economy before the pandemic was "normal" rather than a stagnating, low-growth morass presided over by a smirking do-nothing leader in the Lodge. The government needs households to keep spending -- 7% growth next year, it reckons, and households can't keep digging into lockdown-acquired savings forever, especially when JobKeeper is shut down.