Economic news this week has been focused on speculation about the contents of the Federal Budget. The usual early releases of information indicate that there will be a further shift towards ‘big government’ and interventionist policies.
The Reserve Bank of Australia yesterday decided to hold official interest rates steady at 4.35 per cent, despite the ongoing ‘stickiness’ of inflation. The statement announcing the decision acknowledged that inflation is declining more slowly than anticipated, largely because of high services inflation off the back off wage growth in a still tight labour market, and higher petrol prices because of ongoing geopolitical tensions.
In Australian economic and market news this week, the latest quarterly inflation data was said to have put pay to any thoughts of interest rate cuts by the Reserve Bank of Australia.
In Australian economic and market news this week, new datashow that unemployment is holding fairly steady. The latest figures reveal that unemployment rate rose by 0.1 percentage points to 3.8 per cent in March.
New data on inflation in the United States was stronger than expected for the third month in a row. Pressures on the cost of fuel and rents pushed overall consumer prices up by 0.4 per cent in March, and by 3.5 per cent over the year (up from 3.2 per cent in February).
In recent weeks economic and market discussion has moved to a greater acceptance that monetary policy settings in the developed world, including Australia, may not loosen anytime soon.
In Australian economic and market news, new data show that headline inflation held steady during February, at 3.4 per cent, for a third consecutive month. Price pressures in the housing market were shown to have offset declines in pantry staples like beef, seafood, fruit and vegetables.
In Australia, the unemployment rate unexpectedly fell to 3.7 per cent in February, as 116,000 got new jobs. This rate is around where it had been six months ago, and close to the 50 year lows (3.4 per cent) seen post-pandemic. Commentators suggested that this resilience in the labour market could delay reductions in the official interest rate.
