Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Friday, 5 February 2016

Unemployment to fall to 5.3pc?

SOMP upbeat

Through 2015 the unemployent rate fell from 6.3 per cent to about 5.75 per cent.

And now looking at the forecasts from the Reserve Bank's Statement on Monetary Policy for February 2016 we can see that:

"While employment growth is expected to slow somewhat from the rapid pace seen in the December quarter, it is forecast to remain strong enough to reduce the unemployment rate further."

These central forecasts imply a steady decline in the unemployment rate back towards around 5.3 per cent, but at a slower pace, thus taking until around 2018 to get there.

Inflation forecasts remain benign enough that the Reserve Bank could cut interest rates again if deemed necessary, although the wording of the Statement suggests that rates remaining on hold is the preferred path.

Much appears likely to depend upon the trajectory of interest rates set by the US Federal Reserve and any associated shifts in the exchange rate between the Aussie dollar and the greenback.

Interestingly the GDP growth forecasts remain positive even at the 90 per cent confidence interval for the next three years.