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MNI BRIEF: Australian Unemployment To Remain Low - Kohler

(MNI) Sydney

The Reserve Bank of Australia noted, while the balance between labour demand and supply had improved, unemployment will remain below pre-pandemic levels for the next two years.

Speaking at the Committee for Economic Development of Australia today, Marion Kohler, head of the economic analysis department at the RBA, said the recent softness in economic activity will take time to flow through to the labour market and inflation. “The labour market is still very tight. The unemployment rate is around multi-decade lows, and it is expected to remain below pre-pandemic levels over the next couple of years.”

RBA Governor Philip Lowe stressed Tuesday the Reserve would seek to protect employment gains as it fights inflation (see: MNI: RBA Inflation Strategy to Protect Labour Gains), following its shock 25bp hike to 3.85% (see: MNI RBA WATCH: Shifts Hawkish, Targets Services).

Kohler said inflation eased over the March quarter and will decline further over 2023. “Two competing forces are driving the inflation outlook. The ongoing tightness in the labour market and high level of demand for services lead us to expect domestic inflationary pressures to continue. On the other hand, goods price inflation should ease, as the resolution of supply chain issues flows through."

Daniel covers the Reserve Bank of Australia and the Reserve Bank of New Zealand and leads the Asia-Pacific team.
Daniel covers the Reserve Bank of Australia and the Reserve Bank of New Zealand and leads the Asia-Pacific team.

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