Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)
The Reserve Bank of Australia says there is scope to cut interest rates further as new figures showed the decline in jobs is not just confined to Victoria.
RBA assistant governor for financial markets Christopher Kent, reiterating recent comments by governor Philip Lowe, said additional monetary policy easing could gain a bit more traction now the economy was opening up, including in Victoria.
“They could all go a little lower than they currently are,” Dr Kent told a webinar on Tuesday, with reference to the cash rate and the three-year bond yield target.
Economists expect a cut in the cash rate to 0.10 per cent from 0.25 per cent at the November 3 board meeting and similar reductions to its three-year bond target and the Term Funding Facility.
But Dr Kent declined to speculate whether the RBA would start buying longer-dated bonds other than three-year issues.
However, he said such a move would reduce funding costs for governments and the private sector, while the exchange rate can also be expected to lower.
In his address to the IFR Australia DCM Roundtable webinar, Dr Kent admitted the RBA monetary policy tools had become more complex in supporting the economy.
But its suite of policy tools now influence interest rates and give control over a wider range of rates than previously.
The minutes of the RBA’s October 6 board meeting released on Tuesday reiterated a commitment to maintain highly accommodative policy settings as long as required.
National Australia Bank economist Tapas Strickland said Dr Kent’s address and the minutes suggest the RBA has already concluded that further policy easing is warranted.
“The reopening of the economy sets the scene for these policies to gain the further traction the RBA has been waiting for,” he said.
Rate speculation came as new figures showed further labour market weakness, not just in Victoria where jobs have been notably hit recently because of its COVID-19 lockdown.
Payroll jobs fell 0.9 per cent across the fortnight to October 3, the Australian Bureau of Statistics said.
ABS head of labour statistics Bjorn Jarvis said all states and territories reported a fall in payroll jobs in late September, ranging from a 1.2 per cent decrease in the Northern Territory to a 0.7 per cent decline in South Australia.
Labor points out this was the same fortnight that the Morrison government was cutting the JobKeeper wage subsidy.
The figures came a day after Treasurer Josh Frydenberg and Victorian Premier Daniel Andrews clashed over the state’s poor employment performance.
“The treasurer spends his time pointing the finger at Victoria in a desperate attempt to distract from his own substantial failure on jobs,” shadow treasurer Jim Chalmers and opposition employment spokesman Brendan O’Connor said.
Still, consumer confidence continues to grow after Mr Frydenberg’s tax-cutting federal budget this month, providing a positive outlook for retail spending.
The ANZ-Roy Morgan consumer confidence index rose for a seventh straight time, up 0.4 per cent in the latest week.
ANZ head of economics David Plank said barring Tasmania, NSW and Victoria, all the states were now above an index level of 100, indicating optimists outweigh pessimists.