RBA governor Michele Bullock said the probabilities of a rate cut and rate hike were still reasonably balanced, with perhaps “a little bit of signal” that the bank needs to be watchful of risks to the upside.
RBA governor Michelle BullockCredit: Louie Douvis
Asked about why employment seemed to be so strong despite the economy slowing, Bullock said there were several reasons for the resilience in employment.
“The first is that a lot of the jobs have been created in health and education, [which] are not cyclical things,” she said.
Bullock also said some businesses were only just starting to be able to hire for some of their positions after struggling to find people 18 months ago, and that some were likely “hoarding” employees.
Asked about the impact of immigration on inflation, Bullock said it had not added dramatically to inflation with the exception of some pressure on the housing market.
“Immigration, broadly over the long sweep of history, I think has been positive for Australia,” she said.
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“On the impact on inflation, it’s not actually that straightforward because, yes, new migrants add to demand and there’s been that element of it. There’s certainly a lot of pressure on the housing market. But on the other hand, they’ve added to labor supply.”
Bullock said despite swings in immigration during and after pandemic, government policy would likely steady the flow.
“My understanding, and I think this goes into our forecast, is that the government is looking to put immigration on a much more steady footing going forward rather than these big swings, which we’ve seen,” she said.
“I think our judgment [on the impact of immigration on inflation] is that on balance, it really hasn’t added dramatic to lead to inflation, with the exception that be pressure on the housing market and that’s obviously working its way out in rents.”