Easing in labour market similar to past mild downturns

Reserve Bank of Australia (RBA) Assistant Governor (Economic) Sarah Hunter was out with some comments during the Asian session on Wednesday, saying that high rates are slowing demand in what should be a mild economic downturn.

Key Quotes:

• The labour market is still tight relative to full employment.
• The labour market has moved towards better balance since late 2022.
• Easing in the labour market similar to past mild downturns.
• Some slowing in labour demand will occur via a drop in average hours.
• Expect employment to continue to rise but at a slower pace than population.
• Space for vacancies to fall further without a sharp rise in unemployment.
• Surprised by the strength in the participation rate, including peer economies.
• The outlook is highly uncertain, and our forecasts are likely to be wrong in some way.
• There were signs that the easing in the labour market had started to flow through to wage growth, which was likely past its peak and set to slow further.

Market Reaction:

The AUD/USD pair moves little and remains confined in a range around mid-0.6600s, or the 100-day SMA as traders keenly await the release of the US Consumer Price Index (CPI) report before placing directional bets.