Latest news with #unemployment
News.com.au
3 hours ago
- Business
- News.com.au
‘No magic wand': RBA explains what they are looking for ahead of next rate call
A tight labour market blocked a rate cut in July, but the RBA boss says the central bank isn't looking for mass lay-offs. In her speech at the Anika Foundation Fundraising lunch on Thursday, RBA governor Michele Bullock revealed what the central bank will be looking for when it meets in August to discuss the cash rate. She said the board wanted to see a gradual easing in labour market conditions, that has so far been most evident in fewer job vacancies, reductions in hours worked and declining rates of voluntary job switching. 'These shifts aren't without their challenges, but they all tend to be less disruptive than outright job losses,' she said. Pointing to last week's ABS labour market data, Ms Bullock said it wasn't a 'shock', despite the figures showing job losses spiked to their highest point in more than three years at 4.3 per cent. 'Some of the coverage of the latest data suggested this was a shock – but the outcome for the June quarter was in line with the forecast we released in May,' she said. The RBA forecast unemployment to average 4.2 per cent through the June quarter. She said June monthly data showed a 'noticeable pick-up' in the unemployment rate but when looking at other measures, such as vacancy rates, the jobs market remained stable. 'More broadly, leading indicators are not pointing to further significant increases in the unemployment rate in the near term,' she said. Ms Bullock noted there were signs of a slowing jobs market including falling jobs vacancies and the average hours worked declining, although both remained high compared to historic levels. She said these conditions are challenging for people but they are more favourable than outright job losses. 'Having your hours cut is tough, but it's often preferable to losing a job altogether,' Bullock said, noting some of the decline in hours worked had been voluntary. 'I should note the RBA can't wave a magic wand and control how adjustments in the labour market play out. Interest rates are too blunt an instrument for that. 'Losing a job can be one of the most stressful events in someone's life, and it can have far-reaching implications for families and communities.' The governor highlighted the central bank does not have a jobs target and is not looking for a certain number of job losses. Ms Bullock's speech reinforces the message from the minutes of the RBA's monetary policy board meeting, released on Wednesday, where the central bank revealed a tight labour market was the key blocker of further rate cuts. 'Recent monthly CPI indicator data – which can be volatile and does not cover all items in the CPI – were broadly consistent with this expectation,' the RBA board said. But with more Australians currently in work, the board remained wary the strong employment figures could lead to an increase in inflation. 'The labour market was assessed to have remained tight, with measures of labour utilisation little changed over the prior year,' the minutes read. 'Growth in private demand had begun to recover, but was still subdued.' A cautious RBA monetary board held the official cash rate at 3.85 per cent following its July meeting, with the shock move defying expert commentators and predictions from the money markets. The board voted 6-3 in favour of the hold. 'A minority of members judged that there was a case to lower the cash rate target at this meeting,' the board said. 'These members placed more weight on downside risks to the economic outlook – stemming from a likely slowing in growth abroad and from the subdued pace of GDP growth in Australia.' The RBA monetary policy board will next meet on August 12, with money markets widely forecasting a rate cut.
Wall Street Journal
3 hours ago
- Business
- Wall Street Journal
RBA Pushes Back on Criticism That It Has Been Too Slow to Cut Rates
SYDNEY—The Reserve Bank of Australia is pushing back against criticism that it has been too slow to cut interest rates, risking a sudden rise in unemployment. The jump in unemployment in June didn't catch the central bank by surprise, RBA Gov. Michele Bullock said in a speech to financial market participants on Thursday.
ABC News
4 hours ago
- Business
- ABC News
RBA governor Michele Bullock says June's unemployment rate jump not a shock
Reserve Bank governor Michele Bullock says despite last month's surprise jump in the unemployment rate, the numbers matched the RBA's recent forecasts from May. She said "leading indicators" of the labour market also suggested that the unemployment rate would not keep rising sharply in the near term. "Last week brought us the latest labour market data, which confirmed that the unemployment rate increased in the June quarter," Ms Bullock said. "Some of the coverage of the latest data suggested this was a shock, but the outcome for the June quarter was in line with the forecast we released in May. "That on its own suggests that the labour market moved a little further towards balance, as we were anticipating. "While the June monthly data showed a noticeable pick-up in the unemployment rate, other measures — such as the vacancy rate — have been stable recently. "More broadly, leading indicators are not pointing to further significant increases in the unemployment rate in the near term." Ms Bullock made her comments during her speech to the Anika Foundation in Sydney on Thursday. The title of the speech was The RBA's Dual Mandate — Inflation and Employment. Australia's national unemployment rate rose from 4.1 to 4.3 per cent in June, hitting its highest level in three years. But the unemployment rate hovered at about 5 per cent in the years before the COVID-19 pandemic, so the current numbers remain relatively low. Ms Bullock also reiterated the reasons why the RBA board decided to keep interest rates on hold earlier this month. The decision surprised financial markets, which had expected another rate cut. Ms Bullock said the year-ended "trimmed mean" measure of underlying inflation was 2.9 per cent in the March quarter, which put it under 3 per cent for the first time since 2021. She said the RBA board expected underlying inflation to fall a little further in the June quarter, but it wanted to see further evidence of a downward trend before cutting rates again. "The monthly CPI Indicator data, which are volatile, suggest that the fall may not be quite as much as we forecast back in May," she said. "We still think it will show inflation declining slowly towards 2.5 per cent, but we are looking for data to support this expectation. "Encouragingly, as inflation has slowed, the labour market has eased only gradually and the unemployment rate is relatively low," she said. And having said that, Ms Bullock reminded her audience of the unusual and positive feature of Australia's post-pandemic experience. She said given the RBA's dual mandate, which refers to the RBA's dual goals of achieving price stability and "full employment", Australia's employment overall outcomes in recent years have been "remarkable" by historical standards. "Since the peak of inflation in 2022, headline inflation has declined by over 5 percentage points," she said. "And over the same period, there has been a relatively modest easing in labour market conditions. "The unemployment rate has increased from around 3.5 per cent in mid-2022 to 4.2 per cent in the June quarter this year, and remains low by historical standards. "Crucially, the share of the population in work has remained around record highs. This is in contrast to declines in many other advanced economies. "The fact that unemployment has remained low and employment growth has remained strong is remarkable — and very welcome. "And it is striking that the increase in the unemployment rate has been small compared with the large decline in inflation. This is especially true compared with previous episodes of disinflation in Australia." Independent economist Saul Eslake made a similar point in February, saying it was remarkable that the pace of inflation in Australia had fallen from "intolerable" levels to a "tolerable" level without a recession, without a decline in employment, and without a material increase in unemployment in recent years. "I don't pretend to have any particular expertise, let alone experience, when it comes to matters of political strategy," Mr Eslake wrote. "Nonetheless, I'm genuinely surprised that Treasurer Jim Chalmers and his colleagues haven't been proclaiming often and loudly that they've 'pulled off' something that has never been accomplished before in Australia." Ms Bullock said there were a number of reasons why inflation had fallen in Australia from high levels without unemployment rising too much, unlike in past episodes of high inflation. But she said one reason was households and businesses had continued to believe that inflation would return to the target range, under Australia's contemporary inflation-targeting regime. "A critical feature of the recent high-inflation period is that longer-term inflation expectations remained anchored," she said. "The board were very alert to the risk that inflation expectations could increase. Crucially, that did not happen. "This limited any so-called 'second-round' effects on inflation, which allowed inflation to fall without a sharp rise in the unemployment rate. "A history of low and stable inflation, and the resulting public confidence in the inflation target, enabled the board to adopt a strategy that protected the labour market as much as possible while still ensuring inflation came down."
Yahoo
4 hours ago
- Business
- Yahoo
Australia central bank not shocked by jobless rise, to cut rates gradually
SYDNEY (Reuters) -Australia's top central banker said on Thursday a measured and gradual approach to monetary policy easing was appropriate as the labour market had only eased slightly, shrugging off concerns about a recent jump in the unemployment rate. Speaking on inflation and employment, Reserve Bank of Australia Governor Michele Bullock said a rise in the jobless rate to 4.3% in June from 4.1% was not a "shock", adding that the labour market was slowing in line with forecasts. "Other measures – such as the vacancy rate – have been stable recently. More broadly, leading indicators are not pointing to further significant increases in the unemployment rate in the near term," Bullock said. Bullock said much of the rebalancing in the labour market over recent years has occurred in declines in job vacancies, hours worked and voluntary job switching, which is less disruptive than people losing jobs. "Because the labour market can adjust in different ways, we do not 'target' any one adjustment mechanism, such as a set number of job losses, as we seek to bring demand and supply back into balance." The central bank stunned markets earlier this month by leaving interest rates at 3.85% when a quarter-point cut had been widely expected. In a rare split decision, the RBA board decided to wait for more data on jobs and inflation before deciding whether to move in August. Since then, figures have shown unemployment unexpectedly spiked to a 3-1/2-year high of 4.3% in June, leading markets to almost fully price in an August easing. Bullock reiterated that there was a risk that second quarter inflation data might come in a bit stronger than expected and the central bank continued to assess that a measured and gradual approach to monetary policy easing was appropriate. Core inflation slowed to 2.9% in the first quarter, down from a peak of 6.8% and back within the RBA's target band of 2% to 3%. Data due next week is expected to show a further cooling to around 2.7%. "Our longstanding strategy has been to bring inflation back to target while preserving as many of the gains in the labour market as possible," Bullock said. "This approach meant that interest rates in Australia did not rise as high as they did in some other economies, and so we may not need to lower them as much on the way down." Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Reuters
4 hours ago
- Business
- Reuters
Australia central bank not shocked by jobless rise, to cut rates gradually
SYDNEY, July 24 (Reuters) - Australia's top central banker said on Thursday a measured and gradual approach to monetary policy easing was appropriate as the labour market had only eased slightly, shrugging off concerns about a recent jump in the unemployment rate. Speaking on inflation and employment, Reserve Bank of Australia Governor Michele Bullock said a rise in the jobless rate to 4.3% in June from 4.1% was not a "shock", adding that the labour market was slowing in line with forecasts. "Other measures – such as the vacancy rate – have been stable recently. More broadly, leading indicators are not pointing to further significant increases in the unemployment rate in the near term," Bullock said. Bullock said much of the rebalancing in the labour market over recent years has occurred in declines in job vacancies, hours worked and voluntary job switching, which is less disruptive than people losing jobs. "Because the labour market can adjust in different ways, we do not 'target' any one adjustment mechanism, such as a set number of job losses, as we seek to bring demand and supply back into balance." The central bank stunned markets earlier this month by leaving interest rates at 3.85% when a quarter-point cut had been widely expected. In a rare split decision, the RBA board decided to wait for more data on jobs and inflation before deciding whether to move in August. Since then, figures have shown unemployment unexpectedly spiked to a 3-1/2-year high of 4.3% in June, leading markets to almost fully price in an August easing. Bullock reiterated that there was a risk that second quarter inflation data might come in a bit stronger than expected and the central bank continued to assess that a measured and gradual approach to monetary policy easing was appropriate. Core inflation slowed to 2.9% in the first quarter, down from a peak of 6.8% and back within the RBA's target band of 2% to 3%. Data due next week is expected to show a further cooling to around 2.7%. "Our longstanding strategy has been to bring inflation back to target while preserving as many of the gains in the labour market as possible," Bullock said. "This approach meant that interest rates in Australia did not rise as high as they did in some other economies, and so we may not need to lower them as much on the way down."
