The Reserve Bank governor, Michele Bullock, on Tuesday delivered a miserable assessment of the Australian economy by suggesting the best it can do is 2% growth per year – a rate well below the long-term average and a pace that almost guarantees unemployment will rise.

On Tuesday morning, there was essentially no expectation of a rate rise. The market had been forecasting rates staying at 4.35% ever since the April inflation figures showed a drop in the annual rate from 4.6% to 4.2% followed by unemployment rising to 4.5%:

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Not only was there no change in the cash rate, neither was there any change in Bullock’s bleak view that unemployment likely needs to rise more.

In May, Bullock made it clear the RBA was raising rates not to reduce inflation (“these interest rates rises are not going to do anything for inflation in the next six months”) but purely to raise unemployment so that workers would worry more about holding on to their job than being able to bargain for higher wages.

If this makes you think the RBA always acts firstly in the interests of companies not workers, you are getting warm. In RBA publications, workers getting higher wages is always a worry; companies making higher profits is never bad – even if those profits are........

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