SYDNEY (Reuters) – Australia’s central bank is surprised by strong job growth, according to Deputy Governor Andrew Hauser. He noted that they are ready to adjust policies based on future economic changes.
Hauser mentioned that the robust labor market might indicate either high demand or weak supply. In September, employment exceeded expectations for the sixth month in a row, and the unemployment rate stayed at 4.1%. This suggests a tight labor market, leading to fewer expectations for immediate interest rate cuts.
He stated, “We’re data-dependent but not data-obsessed,” emphasizing that context matters in policy decisions.
The economy is slowing due to high interest rates, but inflation remains stubborn, making it likely that any rate cut will be slower. Currently, market predictions suggest a 26% chance of a rate cut in December, with full expectations for a cut pushed to April next year.
Hauser stressed, “The outlook is uncertain… policy is ready to respond in either direction.” The Reserve Bank of Australia has maintained a cash rate of 4.35%, which is high compared to the pandemic’s record low of 0.1%, aiming to manage inflation and support employment.
Hauser added that their decision to keep rates steady is aimed at safeguarding employment, which means inflation may take longer to control and rates won’t drop as soon as elsewhere.
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