Reserve Bank faces new pressure to pause rate hikes as unemployment rises again
Rising unemployment figures in Australia have increased pressure on the Reserve Bank to pause further interest rate hikes. Economists suggest that the cooling labor market, combined with slowing economic activity, warrants a cautious approach to monetary policy.
Why it matters
The data provides a critical signal for central bank decision-making regarding inflation control versus economic growth.
Australia’s Reserve Bank has been served further grounds to halt its relentless rate hiking crusade after newly published figures showed unemployment has continued to rise.
The data from the Australian Bureau of Statistics released Thursday showed the unemployment rate inched up to 4.5 per cent in July, growing from 4.4 per cent in June.
The rise, while minor, was a further signal of slowing economic activity, coming off the back of recent falls in household spending, slowing GDP growth and sluggish business investment.
It also indicated a wider shift in labour market conditions: unemployment has been steadily rising over the past four years and is now well above the 3.4 per cent rate recorded in July 2022.
There are now 691,500 unemployed people in Australia and Aussies are working fewer hours than they did at the start of the year.
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