Australia’s unemployment rate has surged to a four-year high, sparking a renewed debate on whether the Reserve Bank of Australia (RBA) will adjust its interest rate policy. With new data showing a surprise increase in jobless numbers, analysts are revising their predictions for the RBA’s next move. Pressure is mounting for a rate cut as economic conditions shift.
On Thursday, new figures revealed that the national unemployment rate for September had climbed to 4.5%, up from 4.3% in August. This rise marks the highest jobless rate since November 2021, during the tail end of COVID-19 lockdowns in major cities. The data caught financial markets off guard, reinforcing concerns that the job market is losing its previously tight hold. With the RBA’s next meeting scheduled for Melbourne Cup Day, the latest figures could play a pivotal role in its decision-making process.
Unemployment Numbers Disappoint Economists
According to the Australian Bureau of Statistics, 33,900 people joined the ranks of the unemployed last month, which was far worse than expected. The September increase pushes the jobless rate above the RBA’s forecast for 2025, with many economists now recalculating their expectations for monetary policy. This could make a “November rate cut more likely,” said AMP economist My Bui, acknowledging that the rise in unemployment now complicates the RBA’s outlook.
Victoria, home to Melbourne, reported the highest state unemployment rate at 4.7%, which is especially concerning given the state’s economic weight. The state’s joblessness, along with the national rise, signals that the Australian labour market may be softening more quickly than anticipated.
These developments have intensified calls for action from various sectors. The Australian Council of Trade Unions (ACTU) has demanded that the RBA lower rates, arguing that prolonged high interest rates have contributed to higher unemployment, with working people feeling the brunt of the economic slowdown. “Today’s data shows that holding rates at restrictive levels has meant higher unemployment and more pain for working people.” said ACTU President Michele O’Neil.
Pressure on the RBA to Act Quickly
RBA Governor Michele Bullock recently stated that the central bank sees the cash rate as “marginally tight” but not restrictive. Speaking in Washington, she noted that inflationary pressures—especially in housing and market services—may prevent a significant rate cut in the short term. However, with the latest unemployment figures bucking expectations, the RBA now faces mounting pressure to recalibrate its strategy.
Despite these concerns, the RBA is reluctant to make drastic moves. “Given the experience we had with the previous governor telling people what we think will happen with interest rates in six months’ time, I am still very gun shy of that,” Bullock said, referencing the misleading predictions of her predecessor, Philip Lowe.
Even so, Westpac’s chief economist, Luci Ellis, suggested that the economic slowdown may already be having an impact, with early signs of easing financial conditions. Some experts predict that if the job market continues to deteriorate, the RBA may have no choice but to act sooner rather than later.
