15/03/2024
February 2024 Economic and Market overview.
Headline inflation remained at an annual rate of 3.4% in January, still above the central bank’s target range.
The Reserve Bank of Australia left the official cash rate unchanged at its meeting in early February, but indicated that further increases in borrowing costs cannot be ruled out if inflation proves sticker than expected.
The market does not believe policy settings will be tightened any further and is still anticipating two rate cuts this year.
Labour market trends are less encouraging than in the US. New employment numbers were well short of expectations for a second consecutive month in January and the official unemployment rate rose to 4.1%, from 3.9% in December.
Wages in Australia are still rising by more than 4% year-on-year, but pay growth could start to moderate if overall employment trends continue to worsen.
These indicators are important, as policymakers believe there is a clear link between wages and inflation. As a result, they could wait for a sustained reduction in wage growth before lowering interest rates.
Read more here:https://crosbydalwood.com.au/wp-content/uploads/Market-Wrap-February-2024.pdf