RBA signals labour market softening faster than expected

Summarised from 2 outlets · 4 reports · Updated 21 Oct, 03:02 · Archive

Australia's unemployment has risen faster than the Reserve Bank predicted, with officials suggesting further rate rises may be necessary.

Australia's unemployment rate reached 4.7 per cent in September, marking the highest level since the pandemic and rising faster than the Reserve Bank anticipated. The rate has been gradually increasing since 2022, though it remains well below levels recorded in the decades before COVID-19.

Reserve Bank assistant governor Christopher Kent told the Commonwealth Bank Global Markets Conference in Sydney that unemployment had softened 'a bit faster than we might have forecast', though he cautioned that monthly data tends to be volatile. The central bank must determine whether the rise in joblessness reflects weakening demand or persisting cost pressures. Core inflation remains above the RBA's 2-3 per cent target at 3.6 per cent, exacerbated by Middle East supply disruptions affecting energy prices.

Deputy governor Andrew Hauser said the bank faced 'hard choices' between tackling inflation through further rate rises, which would weaken economic activity and employment, or protecting the labour market but risking inflation expectations becoming embedded at higher levels. He warned that an increasing share of businesses now viewed 3.3 per cent inflation as normal, describing this as 'the central banker's nightmare'. Traders have increased expectations of a November rate rise following September's softer-than-expected jobs figures. Inflation data for the September quarter, due on 28 October, will be crucial to the board's decision.

RBA signals labour market softening faster than expected — Image: The West Australian

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How it is being reported

Hard choices ahead for Reserve Bank: deputy governorAustralia's low unemployment rate has been a great success, a top Reserve Bank official says, but it might need to go higher to get stubborn inflation down.The West Australian · 21 Oct, 02:31
Hard choices ahead for Reserve Bank: deputy governorAustralia's low unemployment rate has been a great success, a top Reserve Bank official says, but it might need to go higher to get stubborn inflation down.Perth Now · 21 Oct, 02:31
Reserve Bank assistant governor Christopher Kent suggests unemployment may be rising faster than expectedChristopher Kent, a Reserve Bank assistant governor, has admitted unemployment has risen faster than expected as households grapple with four interest rate hikes.The West Australian · 19 Oct, 07:50
RBA assistant governor Christopher Kent says labour market softening faster than forecastAustralia’s labour market is showing signs it is softening faster than the central bank expected, Reserve Bank assistant governor Christopher Kent says.The West Australian · 19 Oct, 03:34

In this story: Christopher Kent · Andrew Hauser · Michele Bullock · Reserve Bank of Australia · Commonwealth Bank · Australia

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