By Swati Pandey
SYDNEY, May 6 (Reuters) - Australia's economic recovery has well exceeded expectations but significant monetary support will be required for quite some time as wages growth remain noticeably weak, a senior central bank official said on Thursday.
Australia's A$2 trillion ($1.6 trillion) economy is now back to its pre-pandemic level of output and the unemployment rate has fallen rapidly to 5.6%, just half a percentage point higher than before the pandemic. Measures of underemployment have also declined, while participation in the labour market has jumped to a record high.
"These are much better labour market outcomes than have occurred in other countries," Reserve Bank of Australia (RBA) Deputy Governor Guy Debelle said in a speech in Perth.
"While the Australian economy has experienced better employment outcomes than most other countries, wages growth in Australia has been noticeably weaker than in many comparable economies, most notably the United States," Debelle noted.
Annual wages growth in Australia is below 1.5%, compared with 2% for Europe and nearly 3% for the United States.
The RBA has repeatedly said it will not raise the cash rate from its current 0.1% until actual inflation is sustainably within its 2%-3% target band.
"For that to occur, we will need to see further significant gains in employment and a lower unemployment rate," Debelle said.
The RBA sees inflation unlikely to hit its target band before 2024 at the earliest, although Debelle pointed out that the state of the economy, not the calendar, would be the key determinant of policy settings.
He reiterated that the central bank's Board was prepared to undertake further government bond purchases to help meet its goals of full employment and inflation. "The Board places a high priority on a return to full employment," he said.
The RBA has announced two rounds of A$100 billion worth of government bond purchases and this week said a decision on whether to expand its programme will be taken at its July board meeting. ($1 = 1.2917 Australian dollars)