Key facts
- Australia's unemployment rate hit a five-year high of 4.7% in September.
- Underlying inflation has remained at 3.6% for months.
- Markets price in a 64% chance of a fifth RBA rate hike next month.
Australian Treasurer Jim Chalmers is set to warn of a slowdown in economic growth and a rise in unemployment, attributing the outlook to persistently high interest rates and stubborn inflation. In excerpts of a speech reviewed by Reuters, Chalmers indicated that the Treasury is in the process of revising its economic forecasts for the mid-year budget update scheduled for December. He noted that higher inflation is pressuring households and tighter monetary policy is impacting domestic activity, which is reflected in a softening labor market. Despite these headwinds, business investment has shown resilience, with expectations for it to more than double compared to May and increase by over 5% this year. The Reserve Bank of Australia has already increased its key interest rate four times this year to 4.6%, but underlying inflation has remained at 3.6% for months, with global oil prices posing an additional risk.