Speech by Deputy Governor of the Reserve Bank of Australia Michael Bullock
Abstract headlines via Reuters:
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Employment and the economy need to grow without trend for a while
- The economy is approaching a point of sustainable equilibrium with unemployment at 4.5%.
- Australia is at or even above its full employment estimate for the first time in decades
- Employment is above what we consider consistent with our inflation target
- It was willing to accept a more gradual return of inflation to target than many other central banks
- But entrenched inflation will lead to higher rates, a deep recession, and more unemployment
- Labor market conditions will always decline as inflation is contained
- The balance between labor supply and demand has recently improved somewhat
- However, the job market remains tight by most measures
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These comments seem to strongly suggest a rate hike at the RBA meeting on July 4th.
The unemployment rate is currently 3.55% and Bullock nominates a higher percentage point as “full employment.” This opens the door for further price hike(s). He also says:
- Steady inflation would lead to higher rates, a deep depression, and more unemployment
The implication is that the unemployment rate must rise in order to rein in inflation. This removes the impediment to raising the interest rate in July, and the Bank is comfortable with unemployment rising from here. right or wrong. There is a price hike coming on the 4th of July!
Earlier in the session from Australia central bank
central bank
A central bank is a financial institution that manages a country’s monetary policy, and often this also involves issuing and/or monitoring currency and regulating the money supply. Central banks also typically act as lenders of last resort to banks in times of financial crisis, and can also supervise and regulate banks and other financial institutions. Examples of central banks include the Federal Reserve in the United States, the European Central Bank, and the Bank of Japan
A central bank is a financial institution that manages a country’s monetary policy, and often this also involves issuing and/or monitoring currency and regulating the money supply. Central banks also typically act as lenders of last resort to banks in times of financial crisis, and can also supervise and regulate banks and other financial institutions. Examples of central banks include the Federal Reserve in the United States, the European Central Bank, and the Bank of Japan
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