Could the RBA not cut interest rates at all?

The prospect of the first interest rate cut for this cycle from the Reserve Bank of Australia continues to be pushed back. And while Moody's may argue that "hope is on the horizon", there is no denying that an ultra-tight labour market, in addition to an elongated disinflation process, has made the RBA's task a lot trickier.

This challenge was made all the more apparent last week when the September jobs report was released. The report revealed that the Australian economy added more than 64,000 jobs. Economists had forecast a gain of just 25,000 jobs. The unemployment rate also stayed steady at 4.1%, continuing both the most remarkable run for the economy and the biggest head-scratcher for forecasters.

At one extreme, some economists still believe inflation will come down fast enough for the RBA to cut rates this year. At the other extreme, the labour market's strength may cause the RBA to not cut interest rates at all. One person who has this view is Paul Bloxham, HSBC's chief economist in Australia.

So, does Bloxham have a point? Joining me for this month's episode of Signal or Noise are the aforementioned Gareth Aird, Head of Australian Economics at Commonwealth Bank and Diana Mousina, Deputy Chief Economist at AMP.

Note: This episode was taped on Wednesday 23 October 2024. You can watch the show, listen to our podcast, or read the edited summary here.