CANBERRA, AAP – Reserve Bank of Australia Deputy Governor Guy Debelle says an interest rate rise in the next 12 months is possible, but not inevitable.
Speculation of a rise in the cash rate from its record low 0.1 per cent has grown after recent strong inflation figures and the sharp drop in the unemployment rate.
Asked at a Senate hearing on Wednesday night if the cash rate could go up in the next 12 months, Dr Debelle said: “I think it is possible, I’m not sure that is inevitable.”
Reiterating comments made last week by RBA Governor Philip Lowe, he said there were different scenarios .
“At some point (rates) will be higher. In the end, it is going to depend on how things evolve,” he said.
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Both the RBA and Treasury are now predicting a jobless rate below four per cent later this year, a level not seen in some 50 years.
The unemployment rate dropped to a 13-year low of 4.2 per cent in December.
Economists believe the unemployment rate could dip in next set of jobs data, despite the disruptions caused by the COVID-19 Omicron variant to the economy.
Treasury secretary Steven Kennedy told senators earlier on Wednesday he did not expect the Omicron wave to have a large negative impact on employment.
“It is more likely to have a relatively large impact in the number of hours worked across the economy rather than employment,” Dr Kennedy told the Senate economics committee.
The Australian Bureau of Statistics will release its labour force report for January on Thursday.
Economists’ forecasts centre on an unemployment rate of 4.1 per cent in January, although expectations range from four per cent to 4.4 per cent.
Similarly, predictions for employment point to a flat or unchanged result after the strong gains seen in the previous two months that followed the end of Delta lockdowns, but again forecasts range from a 60,000 fall to a 59,000 rise.
Meanwhile, online jobs platform Seek says it recorded the most job advertisements on its site in the company’s 25 years of operation in January.
Seek’s January figures represent a 4.9 per cent rise from December and an almost 40 per cent increase compared to January 2021, before COVID-19 vaccines were available.
The job ad numbers published on Thursday were particularly strong in Western Australia, where strict border controls have severely limited the number of people moving in to the state.
Elsewhere, the Morrison government’s much trumpeted JobMaker hiring scheme announced in the 2020 budget, which was supposed to support 450,000 jobs, has failed to live-up to its promise.
Treasury officials told a Senate estimates hearing that to-date, the program has only helped create 7357 jobs since October 2020.
It was originally going to cost $4 billion, but that figure has been revised down to $93 million.
Treasury is doing the work on another downward revision in the upcoming budget due in March.