The last mile is the hardest: Unemployment rise shows RBA's new challenge in inflation race
A rise in unemployment was inevitable as the RBA entered the “last mile” of the inflation race. But managing it remains a challenge economically — and politically.
Unemployment, not inflation, is now becoming the main frontier in the political fight over the economy.
The jobless rate hit 4.1% in January. This is the first time it has surpassed 4% in two years, it was a worse result than the market consensus and it represents an extra 22,000 people in the unemployment queue.
It's a monthly read, which can be volatile. But it has economists worried about the trajectory of the economy just a week after the RBA said it wasn't ruling in or out another rate hike.
An hour before the data was released this morning, Reserve Bank governor Michele Bullock was facing questions in Senate estimates from Greens senator Nick McKim over whether the central bank’s decision to increase rates in November was a mistake. McKim was reflecting on the lower spending and inflation data that has since come through, and the long lags for rates to take effect.
