RBA Tightening Cycle May Have Run Its Course Amid Rising Unemployment

Unemployment in Australia has risen slightly to 4.5% in July, according to the latest jobs report from the Australian Bureau of Statistics (ABS). This is up from 4.4% in June and marks a reversal of the downward trend seen earlier this year.

The participation rate also fell to 66.9%, down from 67% in June. Victoria and Tasmania have the highest levels of unemployment at 5.1%, while South Australia has the lowest at 4.1%, followed by New South Wales at 4.2%.

The Reserve Bank of Australia (RBA) delivered three back-to-back interest rate hikes earlier this year, bringing the official cash rate to 4.35%. Policymakers have left rates unchanged in recent meetings, citing a need for more time to assess the impact of previous increases on economic activity.

RBA Deputy Governor Andrew Hauser warned that further rate hikes may be necessary if inflation remains above target. The latest consumer price index showed inflation easing to 3.8% year-on-year, but still above the RBA's target range of 2-3%. The central bank has signaled it will not ease monetary policy until inflation returns to target.