RBC: Past Its Best? Maybe But The Labour Market Remains Very Tight

RBC doubt today’s labour market data “significantly change the RBA’s view of the labour market. The headline prints are well within the band of monthly volatility and remain consistent with a tight labour market and a further strengthening in wage and labour costs ahead. While inflation may be peaking, it remains far too high for comfort and a modestly more restrictive policy stance looks prudent. We stick with a 25bp hike in Feb and final 25bp in Mar with terminal at 3.6% but repeat that a pause in Mar and more drawn-out cycle is possible. For FI markets that are keen to get to terminal and looking for reasons to rally, today’s data will likely be taken at face value fuelling increased discussion around a pause sooner rather than later.”