AUD: RBA under pressure from strong labour data – Rabobank

Rabobank’s Michael Every highlights that robust Australian wages and employment data are increasing pressure on the Reserve Bank of Australia. He notes solid private and public wage growth, strong full-time job gains and low unemployment, and questions how long the RBA can avoid a more hawkish stance without clashing with the housing market, amid public criticism of government fiscal policy.

Strong jobs data versus housing risks

"Strong wages growth and jobs data keep the pressure on the Reserve Bank."

"Private sector wages were +3.4% y-o-y in Q4 and public sector +4%. Jobs growth in January was 17.8K, broadly in line with expectations, but with a surge in full-time employment of over 50K, while unemployment fell a tick to a near-historic low of 4.1%."

"Yes, there are questions about data quality, population growth, and AI, even if Australia is hardly at the cutting edge in that key area."

"But what excuses can the RBA keep finding not to be hawkish, even if that eventually sets up a collision with the housing market?"

"There’s already one underway between former RBA Governor Lowe and the government, the former saying the latter needs to stop spending to get rates down again, the latter saying that’s just a personal vendetta."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)