What Bullock said about jobs and prices
According to Michele Bullock, who leads Australia's central bank, the current 4.5% jobless rate looks a bit tight, and shifting to a 4.5%-5% range would likely cool the labor market sufficiently to ease pressure on inflation. She made the remarks in Sydney on Tuesday at a fireside chat, describing the inflation problem this way: demand in the economy is outpacing the ability to supply goods and services, and the tight labor market shows it.
Her comments come just days before August jobs data lands, with economists predicting unemployment will be unchanged.
The calendar and the board
She pushed back on that framing and on any attempt to read her vote ahead of time. The only thing the bank has highlighted in recent weeks is that inflation risk is skewed to the upside.
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Sorry, shocker."
What markets expect next week
Derivatives pricing points to about a 90% chance the RBA lifts the policy rate next Tuesday to 4.6% from 4.35%. Many economists agree, and some see a follow-up move in November to 4.85%, which would be the highest since late 2008. Traders have ramped up hike expectations this month, with markets fully pricing two more 25 bp increases.
The nine-member board is expected to resume tightening next week as optimism fades about a near-term resolution to the Middle East conflict and inflation pressures stay elevated. The RBA hiked at the year's first three meetings before pausing, while central banks in Europe, the US and Japan have pushed borrowing costs higher in recent weeks.
What it means for your money
If unemployment drifts into the 4.5% to 5% range Bullock highlighted, that would point to a cooler labor market and less inflation pressure. Markets think the board could move next week and potentially again in November, which would lift borrowing costs.
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