The Reserve Bank of Australia is expected to reduce the official exchange rate twice more this year, while the country's unemployment continues to worsen.
Australia's unemployment rate reached 5.3% in August, exceeding market expectations by 5.2% and the RBA's target of 4.5%. This increase in the unemployment rate suggests that a significant space capacity remains in the labor market, said AMP Capital Chief Economist, Shane Oliver.
"In this context, it is difficult to see wage growth improve sooner," he said.
This could mean that the current exchange rate would not be enough to bring down unemployment to the central bank's target and that more cuts would be needed.
"As a result, we remain of the opinion that the RBA will have to further reduce its rates and continue to see the next 0.25% reduction in October, followed by another cut in November, ultimately reducing the key rate at 0.5%, "he said.
Rising unemployment in August will prompt the RBA to make further adjustments to its monetary policy, said Felicity Emmett, chief economist at ANZ Research.
"The leading indicators point to a further deterioration of the labor market in the coming months," she said.
Read also: The forecasts of the big banks "Multiple rate reductions"
Given the expected slowdown in employment growth, the unemployment rate is expected to reach 5.4% in the last quarter of the year.
"This will keep the RBA in looser mode, and we continue to expect the next rate cut at the October meeting," Emmett said.
In addition to unemployment, the central bank is closely monitoring inflation targets.
According to the minutes of the September monetary policy meeting, the RBA would likely consider lowering rates if it was necessary to support growth and achieve its 2-year inflation target. % to 3%.
"Members would assess developments both internationally and nationally, including on the labor market situation, and further ease monetary policy, if necessary," he said. .
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