RBA November Hike Case Weakens After Soft Jobs Data

what happened

Market Talk reports that the case for a Reserve Bank of Australia rate hike in November has weakened somewhat after this week's weak employment figures.

Adam Boyton, head of Australian economics at ANZ, still expects an increase next month, but says the upcoming third-quarter inflation data are now more decisive for that view. He adds that the central bank's sensitivity to a softening labour market has likely decreased.

According to Boyton, the minutes of the September policy meeting indicated the board is more willing to tolerate some weakness in activity and employment in order to bring inflation back to target.

why it matters

For markets sensitive to interest rates and the Australian dollar, the balance between weak employment and inflation trends will decide whether a November move happens. The third-quarter inflation release is the key test: a softer labour market reduces the urgency to tighten policy, and market participants will watch that report closely.

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