As Australia’s economy navigates a post-pandemic recovery, the Reserve Bank of Australia (RBA) faces a pivotal decision this month regarding interest rates. The RBA’s next move will depend on the national employment figures, set to be released tomorrow, which could determine whether another rate cut is on the horizon. With the central bank already reducing rates three times in 2025, the stakes are high for both home buyers and owners.
The RBA’s September meeting, scheduled for the end of the month, marks a key moment in shaping Australia’s economic trajectory for the remainder of the year. While the bank has already taken aggressive action to combat inflation, the release of new data on employment could ultimately decide whether the RBA continues its course of easing or holds steady.
Employment Figures: The Key to the RBA’s Next Move
According to Warren Hogan, managing director of EQ Economics, the employment figures will play a crucial role in the RBA’s decision-making process. Hogan noted that unemployment rates, which have been relatively stable recently, will be a primary focus. With Australia’s unemployment rate forecast at around 4.3% for the end of 2025, the data will provide a clearer picture of the labour market’s health. “The unemployment rate is the key this week for the RBA,” Hogan said in a recent interview with Sky News Australia.
Despite some fluctuations earlier this year, including an uptick in unemployment in June to 4.3%, recent data suggests that the labour market remains resilient. The Australian Bureau of Statistics (ABS) recorded a slight improvement in the unemployment rate to 4.2% in July. A stable or improved jobs market could reduce the pressure on the RBA to make further rate cuts, especially with signs of inflation moving towards the target range.
Mortgage Stress and Housing Concerns
While some Australians are breathing a sigh of relief following recent rate cuts, others fear that further reductions could fuel soaring property prices. Many would-be homebuyers are already grappling with a housing market that has become increasingly out of reach. Areas like Toowoomba in Queensland are seeing mortgage stress, with as much as 74% of homeowners struggling to meet their financial obligations.
Dennis Cowper, director of Real Credit Repairers, commented on the broader issue, stating that many Australians are stretching themselves further into debt to access the property market. “People haven’t stopped borrowing, but they are stretching themselves further than ever to get into the market,” he said. This growing financial strain could lead the RBA to take a cautious approach, particularly if the employment figures do not signal significant weakness in the economy.
