RBA reveals jobless rate prediction

RBA reveals jobless rate prediction

The unemployment rate is expected to fall even lower, fuelling more wage growth, but house prices are tipped to decline further, according to the Reserve Bank of Australia’s latest economic assessment.

The RBA on Friday cut its jobless rate forecast to 3.25 per cent for the December quarter, from the 3.75 per cent it expected in May, in its quarterly Statement on Monetary Policy.

Wage growth is expected to climb to 3.5 per cent by mid next year.

“An increase in average hours worked, which remain below their pre-pandemic trend, is also expected to be a key margin of adjustment in response to strong labour demand,” the statement read.

Treasury expects an increase of 3.75 per cent in 2022-23 and an unemployment rate of 3.75 per cent.

Meanwhile, the RBA predicts house prices will fall further.

“Growth in consumption is forecast to slow as rising prices and higher net interest payments weigh on real disposable income growth and declines in housing prices lower net household wealth,” the statement read.

“The household saving ratio is expected to decline over the forecast period to just below its average level in the years prior to the pandemic.”

The Australian economy is forecast to grow 3.25 per cent this year, then slow down.

“The slowing in growth is expected to be driven by an easing in household consumption growth,” the statement read.

Domestic retail gas and electricity prices are also expected to rise 10 to 15 per cent this year.

The RBA this week raised rates by half a percentage point to 1.85 per cent.

Read related topics:Reserve Bank

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