Australia’s unemployment rate for March stood at a robust 3.5%. Leading some analysts to speculate that the RBA may consider resuming interest rate hikes in May. The Australian Bureau of Statistics (ABS) has reported the addition of approximately 53,000 jobs in March. They have maintained the unemployment rate at a 50-year low of 3.5%.
During the April board meeting, RBA Governor Philip Lowe stated the following. The labour market was a crucial economic indicator in deciding whether to raise rates. Lowe emphasised the tightness of the labour market, saying, “The labour market remains very tight.” The board ultimately voted to maintain the cash rate.
“The tight labour market is evidenced by the unemployment rate which has reached a near 50-year low. And the low rate of underemployment. Despite some firms reporting an easing of labour shortages, many still struggle to hire workers. The number of vacancies has slightly decreased. However, with the anticipated slowdown in economic growth, an increase in unemployment is expected.” said Lowe during the April board meeting, where the Board decided to maintain the cash rate.
Lowe also stated that he envisaged the need for further rate hikes. “When determining the timing and magnitude of future interest rate increases, the Board will closely monitor global economic developments, household spending patterns, as well as the inflation and labour market outlook,” he remarked.
Conclusion
Sean Langcake from BIS Oxford Economics said in an interview with ABC that today’s data reinforces his expectation that the Reserve Bank of Australia will resume raising interest rates in their next meeting. Language added that the RBA anticipates a decline in the labour market throughout 2023, and that increasing interest rates would dampen demand, leading to a rise in the unemployment rate and lowering wage and inflation pressures. “There is scant evidence of vulnerability in these figures and hardly anything to indicate that the labour market is meaningfully weakening.”
RBA Maintains Interest rates amid economic uncertainty
Will the RBA hold the cash rate in March 2024?
