(Bloomberg) -- Australian wage growth picked up further in the final three months of 2023 to pass the Reserve Bank’s forecast peak, suggesting policymakers will remain watchful as they assess price pressures in the economy.

The Wage Price Index advanced 4.2% in the fourth quarter from a year earlier, just topping economists’ estimates, the Australian Bureau of Statistics data showed Wednesday. It was the highest recorded annual growth since the March quarter of 2009. On a quarterly basis, wages grew 0.9%, in line with estimates.

The report is likely to reinforce expectations that the RBA will keep borrowing costs unchanged at 4.35% at its March 18-19 meeting, with the board paying close attention to inflation and the labor market.

RBA officials have previously said wage growth of 4% is consistent with the central bank’s 2-3% inflation target provided the economy’s productivity performance improves. Still, policymakers are mindful that a prolonged period of elevated inflation could trigger larger salary demands and prompt businesses to jack up their prices further, making it tougher to return CPI to target.

Public and private sector wage growth “was driven by organisation-wide annual wage and salary reviews,” said Michelle Marquardt, ABS’s head of prices statistics. 

Read More: RBA Considered Interest-Rate Hike, Saw Pause Case as Stronger

The Australian dollar was little changed after the data, maintaining a 0.1% advance at 65.54 US cents. The policy sensitive three-year bond yield remained two basis points lower on the day at 3.73%. 

The wages report follows data last week that showed unemployment edged up to a two-year high of 4.1% as job gains failed to keep pace with powerful population growth.

--With assistance from Victoria Batchelor and Garfield Reynolds.

(Updates throughout.)

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