Reserve Bank of Australia Deputy Governor Michele Bullock speech
Summary Headlines via Reuters:
- Employment, economy need to grow below trend for a while
- Economy would be closer to sustainable balance point with unemployment at 4.5%
- Australia is at or even above estimates of full employment for the first time in decades
- Employment is above what we would consider to be consistent with our inflation target
- Have been willing to accept more gradual return of inflation to target than many other central banks
- But entrenched inflation would lead to higher rates, deep recession and more unemployment
- Labour market conditions will invariably soften as inflation is contained
- Balance between labour demand and supply has improved somewhat recently
- Nevertheless, the labour market remains tight by most measures
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These comments seem strongly suggestive of a rate hike coming at the July 4 RBA meeting.
The jobless rate is currently 3.55% and Bullock nominates a percentage point higher as 'full employment'. This opens the door for further rate hike(s). Also says:
- entrenched inflation would lead to higher rates, deep recession and more unemployment
The subtext is that the unemployment rate must rise in order to restrain inflation. This removes a barrier to a rate hike in July, the bank is comfortable with higher unemployment from here. Rightly or wrongly. There is a rate hike coming on July 4 folks!
Earlier in the session from Australia's central bank :
