Skip to main content

Tight labour market bolsters case for a final rate hike

The decline in Australia's labour force in September reinforces our view that net migration is providing less of a boost to labour supply than many had anticipated. Indeed, NAB's Q3 business survey showed that firms are still contending with acute labour shortages. With labour-market bottlenecks putting upward pressure on services inflation, we expect the RBA to hand down a 25bp hike at its meeting in November. In other news, we published a detailed report this week on why we expect real equilibrium interest rates in advanced economies to rise over the coming years. Along these lines, we've revised up our long-term policy rate forecasts for both Antipodean economies.

ANZ Drop-In (25th October):  Is the RBA done hiking rates? We will discuss Australia's Q3 CPI data, the near-term outlook for monetary policy, and the financial market implications of any further tightening. (Register here.)

Become a client to read more

This is premium content that requires an active Capital Economics subscription to view.

Already have an account?

You may already have access to this premium content as part of a paid subscription.

Sign in to read the content in full or get details of how you can access it

Register for free

Sign up for a free account to gain:

  • Unlock additional content
  • Register for Capital Economics events
  • Receive email updates and economist-curated newsletters
  • Request a free trial of our services

Get access