Australia: Why is the RBA more concerned about inflation now than the previous month?

Head of Macroeconomic Forecasting at Oxford Economics Australia Sean Langcake speaks on the RBA in this interview with the ABC, noting that we expect to see two more rate hikes before the RBA takes a protracted pause.

The labour market remains in a position of strength, with employment increasing by around 76,000 and the unemployment rate ticking down to 3.6% in May.

There was a slight wobble in the headline labour market indicators in April, which begged the question of whether a labour market slowdown was upon us. Today’s data suggest that’s not the case. Taking the two months together, employment and hours worked have increased steadily, and the unemployment rate remains at a very low level.  

The RBA has maintained a hawkish tone following the June rate rise, expressing concerns over the persistence of underlying inflation. These data will do nothing to allay those concerns. The labour market remains very tight, which will contribute to stronger wage growth over 2023 – compounding the upcoming increase award wages. We expect to see two more rate hikes before the RBA takes a protracted pause.

Watch Sean’s full interview with Sky News’ Ross Greenwood below: