Two releases this week will shape expectations for the Reserve Bank of Australia’s next move: the minutes of its September policy meeting, due Tuesday, and Thursday’s September labour force figures. Both come out at 11:30 am Sydney time, 00:30 GMT (8:30 pm ET the previous evening).
Today we get the minutes.
In September, the RBA’s Monetary Policy Board raised the cash rate by a quarter point to 4.60%. The decision was unanimous and widely expected, and it was the fourth increase of the cycle. The board said inflation was still too high, reflecting strain on domestic capacity as well as global shocks from the Middle East conflict and the AI investment boom. It acknowledged that the economy was slowing and the jobs market easing. Neither was happening fast enough to return inflation to target within a reasonable timeframe, it said, particularly with oil prices under renewed upward pressure.
CBA says the minutes should show how seriously the board considered keeping rates on hold. It will also be looking for whether they echo the softer tone Governor Michele Bullock struck at her press conference, when she stressed that the four hikes would take time to work through the economy. The bank sees a higher bar for further tightening. Westpac takes a firmer view and forecasts another increase, to 4.85% by December.
The September hike has already weighed on households. Westpac’s consumer sentiment index fell 4.7% to 80.4 in October, close to the weakest readings in the survey’s history.
On jobs, August brought a surprise gain of around 40,000 positions. Unemployment still rose to 4.6%, the highest since late 2021, as participation climbed to 67.1%. Westpac’s forecast matches consensus: 20,000 new jobs in September, with unemployment unchanged. CBA expects a smaller gain of 10,000 and also sees the jobless rate at 4.6%. It warns that changes in the survey sample could make this month’s print noisier than usual, and it expects unemployment to edge higher as growth slows.
The Australian dollar fell on Monday as escalating war in the Middle East, including Houthi attacks on Saudi Arabia, weighed on demand for risk-sensitive currencies. Geopolitics is likely to remain the main driver, but RBA policy is an important underlying factor. The September hike has added some support for the currency through wider interest rate differentials, so a dovish tone in the minutes or a rise in unemployment on Thursday would weaken the case for further tightening and could leave the Australian dollar more exposed. A firmer message from the board would help cushion it.
This article was written by Eamonn Sheridan at investinglive.com.
Source: Investing Live - News
