Bank heads to open up before ‘urgent’ rate cut talks
When central bank governors speak out after the shock jump in unemployment, they could set the table for interest rate cuts.
Federal Reserve Governor Michele Bullock and key lieutenant Brad Jones will touch on this week’s events two weeks before their meeting and consider the issue of a fourth rate cut for 2025.
Australia’s unemployment rate rose to 4.5 percent in September; This rate was the highest level in four years, well above the forecasts of analysts and economists.
Rising interest rate expectations have sent the local stock market into overdrive, recording its highest close ever on Thursday.
This cut will be welcome news for the Australian Council of Social Service; this council stated that for every vacant job, two people are currently unemployed.
“Keeping interest rates high negatively impacts employment and livelihoods,” said CEO Cassandra Goldie.
“The biggest risk to the economy right now is not a resurgence in inflation, but further job and income losses.
“Immediate rate cuts are essential to support job creation and prevent further increases in unemployment.”
Ms Bullock will give the Bradfield Speech on Friday.
Ahead of the surprise jobs data, he had noted that the job market was a bit tight, meaning there were more jobs than there were employees available.
“But we look at a lot of different indicators of the labor market, so those two things (inflation and employment) tell us that it’s a little bit tight, but close to balance,” he said.
While labor figures contributed to the Central Bank keeping the cash rate steady at its September meeting, the latest data appears to pave the way for a 0.25 percent rate cut.
“While the underemployment rate has slowly decreased, other measures of labor underutilization have remained broadly stable,” the meeting minutes said.
William Buck chief economist Besa Deda said good news was on the way for borrowers.
“Governor Bullock’s description of monetary policy as ‘marginally tight’ at a forum in Washington reinforces our view that further easing will continue,” he said.
“We maintain our forecast for two more rate cuts before the middle of next year, with the next rate cut in November.”
Meanwhile, Wall Street investors are evaluating Donald Trump’s latest statements regarding tariffs.
The US president says his proposed 100 percent tariff on goods from China would not be sustainable, but blames Beijing for the latest stalemate in trade talks.
S&P 500 closed the session at 6,664.01 points with a 0.53 percent increase on Friday. Nasdaq increased by 0.52 percent to 22,679.98 points, and Dow Jones Industrial Average increased by 0.52 percent to 46,190.61 points.
Australian stock futures were paused, down seven points, or 0.07 per cent, at 14,507.
The S&P/ASX200 index fell 73.1 points on Friday, falling 0.81 percent to 8,995.3 points, while the overall index fell 82.7 points, or 0.88 percent, to 9,293.2 points.
