SYDNEY (Reuters) – Australia’s central bank is surprised by the strong growth in jobs, according to Deputy Governor Andrew Hauser. He noted that policymakers are prepared to adjust to future economic changes.
Hauser explained that the strong job market might indicate an excess demand or a weaker supply side in the economy. In September, employment exceeded expectations for the sixth month in a row, with the unemployment rate steady at 4.1%. This situation suggests a tight labor market and affects prospects for immediate interest rate cuts.
Hauser emphasized that while the bank relies on data, they consider the broader economic context. The central bank isn’t planning any immediate rate cuts, with only a 26% chance of a reduction in December, while swaps indicate the first cut might not happen until April next year.
The RBA has kept interest rates stable at 4.35%, which is high compared to the pandemic low of 0.1%, aiming to control inflation between 2%-3% without losing job gains. Hauser mentioned that they intentionally did not raise rates as much to protect employment, meaning inflation will take longer to decrease and rates may not drop as quickly as in other countries.
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