Rates set to rise as RBA governor says 'heat' needs to be taken out of job market
All four major banks and the bulk of money market traders believe the Reserve Bank will raise interest rates next week and governor Michele Bullock did nothing to dissuade them during a speech in Sydney.
The Reserve Bank of Australia (RBA) is set to increase interest rates next week, according to all four major banks and most money market traders. Governor Michele Bullock warned that Australia's jobs market remains too tight, putting upward pressure on wages, business costs, and inflation. She suggested that unemployment rates between 4.5 and 5 percent would help alleviate the pressure on inflation.
The latest unemployment data, released by the Australian Bureau of Statistics on Thursday, will be the final economic indicator before the RBA Monetary Policy Board meeting on September 28-29. After Bullock's testimony, the three major banks that previously forecasted a rate hold in September revised their predictions to expect a rate hike at the meeting.
The futures pricing on Bloomberg indicates a 90 percent chance of a rate increase next week, with a 50/50 chance of a second hike in November. The RBA governor also addressed the impact of artificial intelligence on the economy, noting that while it could boost productivity in the long term, it is currently adding to demand and causing a short-term price increase.
Written by urgent.news from ABC News AU's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
