Before a decision is made on whether another interest rates rise will be on the cards in August, there are many things to considered, according to the Reserve Bank of Australia (RBA).
On June 26, Australian Bureau of Statistics (ABS) data showed annual inflation had hit 4 percent in May, up from 3.6 percent the month before.
Speaking at the Citi A50 Australian Economic Forum on June 27, RBA deputy governor Andrew Hauser said there was more economic data that needed to be taken into consideration before the next interest rates meeting.
“There’s a whole series of data coming out between now and when we meet in August,” he told the forum.
Mr. Hauser says the RBA will study a multitude of data in the lead-up to its August decision.
Factors to be considered will include statistics on jobs, retail and business, as well as quarterly inflation numbers.
“Inflation remains above target and is proving persistent, the outlook remains highly uncertain, and returning inflation to target is the priority,” he said.
“All three of those things were true a month ago and they are true now.”
The deputy governor said services inflation—the increase in the price of services paid by customers—was a struggle faced not just by Australia, but other nations too.
“Underlying inflation is intolerably high in Australia. In fact, Australia is the only G10 country where underlying inflation has increased since December,” he said.
Core inflation in Australia currently sits at a higher level than economies including the United States, United Kingdom, Canada, New Zealand, Japan, Norway, and Switzerland.
Australia’s interest rates have risen 13 times since May 2022.
From February to May this year, job vacancies had dropped by 10,000 positions.
The world of finance is already stirring, with this week’s inflation result prompting investors to ramp up their rate rise bets and prompting several economists to change their interest figure forecasts.
The 4 percent rise in the 12 months to May took annual inflation to its highest reading in six months and was above consensus forecasts of 3.8 percent.
On July 28, Australia’s Treasurer Jim Chalmers announced the nation was on track to hand down a surplus for the financial year.
The federal government is touting its surpluses as proof of sound economic management, but consistent rises in core inflation in Australia while other countries have experienced relief has led to criticism.
Opposition Leader Peter Dutton referred to the government’s fiscal approach as “reckless,” claiming Labor was leaving the central bank to deal with inflation.
Shadow Treasurer Angus Taylor said Labor had failed three budgets, which had put pressure on the RBA to keep interest rates higher for longer.
“There is no relief in sight for struggling families,” he told parliament.
