Pre-election rate cut hopes fading after shock jobs figures
Stronger-than-expected unemployment data has dampened hopes for a February rate cut — though some economists argue the door isn’t completely closed.
The federal government faces the growing prospect of heading to the polls without a single rate cut from the Reserve Bank.
After hopeful signals from the RBA on Tuesday that earlier rate cuts could be on the horizon, shock data revealed November’s unemployment rate had dropped to its lowest point since March.
Economists had expected the rate to increase, and are so baffled that some are even questioning the dataset itself. Krishna Bhimavarapu of State Street Global Advisors said the figures run counter to the GDP shortfall, adding he “would not rule out any sampling issues”.
Westpac economists also urged caution, noting a similar pattern occurred in late 2023 when shifting seasonality created a “head fake”. This means there’s a risk of a quick reversal in December.
