- We're bringing down inflation and keeping jobs very satisfying
- Monthly numbers can be volatile but unemployment rate jump was a surprise
- Unemployment could come down again next month
- The board is cautious about policy, interest rates are still a bit restrictive
- Inflation is back in the target band and unemployment rate is still pretty low so still in good condition
- We will have to decide whether a cut is needed to help the job market
- Rates might not comes down as far as others
- If we end up with core inflation at 0.9% that would be a material miss (this would be 0.3% above their forecast for the Q/Q measure)
- There's still a bit of tightness in the labour market
- US tariffs could potentially be deflationary for Australia
- Supply of labour not growing as fast as it was
- Labour market won't fall off a clif
- I'm prepared to change my mind and move if we prove wrong on the labour market
The market is pricing a 61% probability of a 25 bps rate cut at the upcoming meeting in November. On Wednesday, we get the quarterly inflation report which will likely decide whether the RBA is going to cut or skip given also the positive US-China outcome.
Bullock's comments lean on the hawkish side and it looks like they will need a downside surprise in the quarterly inflation report to have more conviction in a rate cut at the upcoming meeting. To me, it sounds like she's ok with holding rates steady for now.
