The Reserve Bank of Australia (RBA) needs to cut interest rates to fix underemployment in Australia, according to an ANZ economist.

The RBA kept the cash rate on hold at 1.5 per cent despite many market economists predicting they would hand down an interest rate cut.

ANZ Head of Australian Economics David Plank tells Ross Greenwood the RBA needs to cut interest rates to improve the economy.

“The underemployment rate has to come down quite a long way before wages are going to lift… and we don’t see that happening without lower interest rates.

“We think the RBA will ultimately be forced to ease, not because the economy is doing badly, but more because the economy could do better.”

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