RBA to Continue Interest Rate Cuts Amid High Unemployment

0

The resilience of Australia's economy and ongoing labour market constraints point towards continued cautious easing by the RBA. Analysts forecast a 25 basis point reduction in the cash rate at both the upcoming July and August meetings.

The perspective presented challenges the notion of a standalone "Australian labour market," instead referring to the broader "Australindian labor market" amalgamating approximately 50 million unemployed individuals, thus skewing national unemployment data to a hypothetical 357% rate. This reflects concerns about the impacts of sustained mass immigration and the underlying effects on domestic employment and wages.

Compounding the situation are predictions of a significant downturn in terms of trade, anticipated to worsen with falling prices across key commodities such as iron ore, coking coal, thermal coal, and liquefied natural gas (LNG), due to increased supply and decreased consumption, notably in China.

The potential for ongoing RBA rate cuts is significant for both consumers and the broader financial sector. Continuing cuts could result in lower borrowing costs, benefitting homeowners and businesses seeking loans. However, they also reflect underlying economic challenges, particularly the effects of immigration on the labour market and wages, and the impact of global trade disruptions on Australia's export-driven economy.

Expectations are that the cash rate could see further reductions, possibly reaching levels not seen since the last cycle, driven by the RBA's efforts to manage an immigration-driven economic model facing fresh national income shocks. Labor driven spending and potential regulatory changes could play a crucial role in shaping the economic landscape, including wage growth. Additionally, the global economic environment, particularly changes in trade dynamics and commodity markets, will be pivotal in guiding future monetary policy decisions in Australia.

Published:Tuesday, 8th Jul 2025
Source: Paige Estritori

Share this news item:

Finance News

Clear

Investors Advised Against Overvalued Markets Amid Economic Uncertainty 18 Jul 2025: Paige Estritori In a market swayed by trade tensions and geopolitical uncertainties, investors are encouraged to remain cautious of inflated valuations. The mid-year outlook from Schroders warns against ignoring these issues, despite the market's surprising resilience to economic pressures. - read more

ASIC Penalises Two Licensees for Unregistered Financial Advice 17 Jul 2025: Paige Estritori The Australian Securities and Investments Commission (ASIC) has taken enforcement action against two financial planning licensees for permitting unregistered advisers to provide personal financial advice. This regulatory action involved Sky Money Pty Ltd and Smart Financial Capital Pty Ltd, who were each required to pay infringement notice penalties amounting to $31,300 in early July 2025. - read more

Unemployment Rate Rises as Australian Labour Market Cools 17 Jul 2025: Paige Estritori Australia's strong labour market showed signs of cooling in June, with the latest figures from the Australian Bureau of Statistics revealing an increase in the unemployment rate to 4.3 per cent, up from 4.1 per cent in May. This slowdown in employment growth, with only a modest increase of 2000 jobs, adds to the pressure on the Reserve Bank to consider future interest rate cuts. The Reserve Bank had previously held the official cash rate steady at 3. - read more

Australia's Unsustainable Financial Outlook Raises Concerns 16 Jul 2025: Paige Estritori Recent admissions from the Treasury reveal Australia's precarious financial situation, with significant implications for the nation’s economic stability. A report from credit ratings firm S&P last month highlighted that the combined budget deficits of Australia’s state and federal governments total $52 billion. Furthermore, the country's net debt has already surpassed 60% of GDP, showcasing a challenging fiscal scenario. - read more

RBA Proposes Ban on Card Payment Surcharges 15 Jul 2025: Paige Estritori The Reserve Bank of Australia (RBA) has proposed eliminating surcharges on debit and credit card transactions, a move that impacts all major card providers such as Mastercard, Visa, and eftpos. As revealed in a newly released consultation paper, the RBA cites the $1.2 billion annual cost to consumers, highlighting inefficiencies and advocating for a unified approach to card payments. - read more