This paper explores the formation of households’ wage and inflation expectations in order to better understand the role they play in monetary policymaking and the macroeconomy. It finds that households associate high wage growth with good economic outcomes and high inflation with bad ones, suggesting little trade-off between reducing inflation and economic activity.

There is a vast international literature exploring the consequences of low interest rates for various banking sectors. In this paper, the author explores how this international literature relates to the Australian banking sector, which operates differently to other jurisdictions.