Declining employment in Australia slows down the rate hike

Employment rates in Australia have almost stopped, while the unemployment rate has remained unchanged. This would suggest that the Reserve Bank would remain on the sidelines of global policy tightening.

According to government data released Thursday, the Aussie dollar declined as employment figures showed an increase of only 900 people in employment since August, far less than the 25,000 increase that had been projected. No economist was close to predicting a slowdown in job growth. Previously, the number of unemployed had held steady at 3,5%.

The release bolstered expectations for a new one-quarter interest rate hike by the RBA next month to bring the rate to 2,85%. The RBA thus became the first major central bank to slow the rate. Governor Philip Lowe halted any discussions with his colleagues on the issue two weeks ago. His decision this month to move to a smaller step, ending four consecutive halving-point hikes, put him at odds with global policymakers who insist on excessive hikes to suppress inflation.