‘Although forward-looking indicators of labor demand continued to suggest an increase in employment growth over the period ahead, this has been true for some time without leading to an improvement in labor market conditions.’ – Reserve Bank of Australia
Minutes of the Reserve Bank of Australia’s meeting released on Tuesday showed that policymakers would mainly focus their attention on the country’s labour and housing markets going forward. The Central bank pointed to a significant weakness in the labour market and rising underemployment, with the unemployment rate at a record high of 5.9%. Therefore, the RBA highlighted the need for consistent monitoring of the labour markets. At the end of its latest meeting, the Bank voted to keep cash rate unchanged at a record low pf 1.50%, stating that it would continue to seek ways to ensure stronger investment and hiring in the non-energy-related sectors. The Central bank expressed also concerns over surging housing prices in Sydney and Melbourne. As to inflation, the headline inflation rate is set to rise 2% in 2017 amid higher oil prices, while the return of core inflation to the RBA’s 2% inflationary target would probably take much longer. A report released last week showed that growth in the property market offset household income growth, pointing to overheating in the market. However, the Bank said that higher oil prices provided a significant boost to Australia’s national income during the first quarter of 2017.
