Australia: Unemployment to 4.5 and beyond - ANZ

ANZ analysts point out that the RBA believes the NAIRU for the Australian economy is now around 4.5%, lower than previously thought.

Key Quotes

“In its August Statement of Monetary Policy, the RBA will release forecasts out to December 2021. We consider how challenging it will be to achieve the job growth required to see the unemployment rate fall to 4.5% by the end of the forecast period.”

“Relative to its May SoMP, the RBA is starting from a weaker position. The unemployment rate is now higher than it had expected.”

“We think that getting the unemployment rate to 4.5% by the end of 2021 is achievable, providing there is an additional one or two rate cuts, global growth holds up and the AUD weakens. However, that is a lot of things that have to go right for the unemployment rate to get there. As such, we think the RBA will have an easing bias for the next one to two years.”