The labour market is softening only at a glacial pace, thanks in no small part to strong public sector jobs growth. That leaves the RBA in a bind.
On the day that the US central bank cut interest rates for the first time in four years, it was fitting the latest jobs and population data confirmed Australia’s central bank is some way from following suit.
Not only is Australia’s jobs market clearly having no trouble absorbing all these new arrivals, but rapid population growth is adding to demand, and feeding into rising house prices and household wealth. RBA governor Michele Bullock has told investors not to expect a rate cut this side of Christmas and Bloxham isn’t straying from his view that the first RBA cut won’t arrive until the middle of next calendar year. And he sees only 0.5 per cent of rate cuts in 2025.
“They’re becoming more impatient, and they’re starting to deliver more support. And that’s why you’re seeing public demand starting to be supportive, and fiscal policy a bit looser now. That’s going to mean that it takes longer for inflation to come down.”
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