It believes the economy will expand by 2.25 per cent this year,down from the 2.4 per cent it forecast in August and well short of the 3.3 per cent it predicted in its monetary policy statement in November last year.
The bank last month cut official interest rates to a record low of 0.75 per cent,arguing it wants unemployment down to 4.5 per cent to lift inflation.
But it now thinks wages will grow by only 2.2 per cent through 2019 and will reach a 2.3 per cent rate by the end of 2021. Unemployment is tipped to get down to 4.9 per cent,from 5.2 per cent,over the same period.
"Wages growth is low and shows little sign of picking up,"the central bank said inits quarterly monetary policy statement.
Its wages forecasts are now well short of what the Morrison government predicted in the April budget. The RBA is tipping wages to grow a full percentage point slower than Treasury,which will update its forecasts next month.
The slow lift in wages is contributing to soft household consumption,which is now expected to grow 1.4 per cent this year.Retail sales are growing at their slowest rate since the 1990-91 recession – with demand for furniture,cars,utilities and recreational goods all slipping sharply over the past year.
The bank noted jobs growth remains strong – particularly in the household services area,which has added almost 1 million positions since 2011,and in healthcare,which is up by almost 600,000 roles over the same period.