RBA tipped to stand still on rates
AUSTRALIA’S strong run of employment growth is unlikely to pressure the Reserve Bank into immediate action to lift interest rates from record lows.
Australian Bureau of Statistics data released yesterday showed the country has achieved a record-equalling 15th consecutive month of increasing job numbers despite a rise in the unemployment rate to 5.5 per cent.
Pitcher Partners director of wealth management David Lane said while the RBA would take the jobs data as a sign of confidence in the economy, it was unlikely its views on interest rates would change.
“The number of Australians with jobs has risen, but wages growth has been very low for some time,” he said. “Our expectations are that any rise in the official cash rate would occur in the second half of 2018.”
Mr Lane said if the growth in employment continued this year, this could lead to some growth in wages as employers sought to attract and retain talent. “This, in turn, could contribute to inflationary pressures in the second half of calendar 2018,” he said.
CommSec chief economist Craig James agreed that while the job market was strong, growth rates of both wages and prices were only modest.
The number of people in work rose by 34,700 in December, according to ABS data – well above expectations of 15,000 new jobs in the month.