Reserve Bank says the jobless rate needs to rise to about 4.5% to bring the economy back into balance
Australia's unemployment rate needs to rise to help contain inflation and avoid higher interest rates and a deep recession, a top central banker warned on Tuesday, after data showed little loosening in a still drum-tight labour market.
“Our goal is to return the labour market back to a level more consistent with full employment ... We think this can be achieved if employment and the economy more generally grow at a below trend pace for a while,” said Bullock at the Ai Group in Newcastle. The RBA has already raised interest rates by 400 basis points to an 11-year high of 4.1%, including a surprise hike earlier this month out of fear that inflation was becoming entrenched.Bullock warned if inflation were to become entrenched in people's expectations, that would mean higher rates.
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