Goldman Sachs says RBA is continuing its less dovish lean
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More news: Goldman Sachs said that comments made by RBA governor Michele Bullock in her address on Monday evening indicate that the central bank is continuing its less dovish lean.
In a research note published after Bullock’s address, Goldman Sachs said it views “Bullock's comments around the labour market, market services inflation and general cautiousness as continuing the less dovish lean by the RBA over recent weeks and prior to the surprisingly large rise in the unemployment rate reported in September. The outcome of the RBA's November Board meeting remains contingent on the 3Q2025 CPI report (29 October).”
Bullock, who continued to characterise monetary policy as "still a little bit restrictive", and the labour market as "a little tight", noted that she does not want to "leap at a single number" when asked about the recent rise in the unemployment rate, the US bank observed.
“When asked about the upcoming Q32025 CPI release, RBA Governor Bullock said that a 0.9%qoq rise in trimmed mean inflation would be a "material miss" to the RBA's August forecast of 0.6%qoq.” Bullock also reiterated that the areas of concern are market services inflation and dwelling costs.
RBA to choose between cutting rates or boosting jobs: Bullock
The news: RBA governor Michele Bullock said that the country’s monetary policy board will have to choose between lowering interest rates or holding steady to keep pressure on inflation at its upcoming November meeting.
The context: During a fireside discussion at the Australian Business Economists event in Sydney on Monday evening, Bullock referred to higher-than-expected unemployment figures and inflation data: “Monthly numbers can be volatile and the jump in the unemployment rate was a bit of a surprise...The monthly inflation numbers are also very volatile.”
Bullock said that the way the board is thinking about balancing the raised inflation and unemployment data is by taking a “cautious” approach. “I think we just have to wait for a bit more data.” She added that as the RBA chose not to push rates as high as other nations during the tightening cycle it may not feel the need to drop back down as much as other central banks.
Bullock noted that new forecasts due for release this week will help inform the board’s November interest rate decision. “On that basis we can make some decisions about whether or not we think there are some more interest rate cuts to address the unemployment market or whether we’re a little bit more worried about the inflation rate,” Bullock said.
Bullock said we should take an optimistic note, as inflation remains “in the band, not down at the midpoint of the target” and “the unemployment rate is still pretty low compared to where it was pre-Covid. So I think we’re in a pretty good position.”
Australia’s unemployment rate rose to 4.5% in September, while CPI came in at 2.7% for the June quarter. Consensus expectations are for headline CPI, due for release on Wednesday, to read 1.1% over the quarter and 2.9% over the year with the trimmed mean to drop to 0.8% over the quarter and 2.7% over the year.
The sources: RBA , Goldman Sachs research note
