Australia’s inflation remained above the Reserve Bank of Australia’s target in September as New South Wales Premier Chris Minns warned a further rate increase could cost jobs before a Nov. 3 decision.
Australian Bureau of Statistics (ABS) data showed consumer prices rose 4.3% in the 12 months to September, compared with 4.0% in the 12 months to August. Trimmed mean inflation, a measure of underlying price growth, was 3.6%, up from 3.5% in the 12 months to August. Both figures exceeded the RBA’s target range of 2% to 3%.
The RBA announced a 25-basis-point increase in its cash rate target on Sept. 29, effective Sept. 30, bringing the rate to 4.60%. The bank cited elevated inflation, higher global energy prices and pressure on domestic capacity. It said the economy appeared to be slowing and demand needed to remain subdued for a time to ease capacity pressures and return inflation to target.
The RBA says its cash rate target guides overnight lending between banks. Changes to the benchmark pass through to borrowing and deposit rates, influencing economic activity, employment and inflation. Its objectives are to return inflation to the 2% to 3% range and achieve sustained full employment. EconoTimes previously outlined inflation pressures ahead of the RBA’s November meeting.
The Guardian reported Monday that Minns warned another increase could cause permanent job losses and business closures. “There’ll be jobs that go that will never come back,” he told the newspaper. He also called on governments to restrain spending to help ease inflation, the outlet reported.
Major bank forecasts differed ahead of the meeting. National Australia Bank forecast a 25-basis-point increase in November. Commonwealth Bank’s central forecast was for the RBA to hold rates, though it said the risk of further increases was growing.
Treasurer Jim Chalmers said a government budget update in December would include a savings package. The RBA is scheduled to announce its decision at 2:30 p.m. Sydney time (3:30 a.m. UTC) Tuesday, Nov. 3.
