Australian unemployment and RBA policy
Michael Knox
Morgans
The US and Australia are in different employment cycles. As a result of a Fed Funds rate near zero and quantitative easing, US unemployment is falling. In Australia, interest rates are well above the zero bound. The RBA was worried that there might be a possible wages breakout caused by the mining construction boom. It therefore kept a firm hand on monetary policy. This has resulted in an extended growth recession. A growth recession is what happens when growth in the labour force is faster than growth in employment. Unemployment goes up. In Chart 1 we can see the level of Australian unemployment since January 2003. The period from 2003 to 2008 saw falling unemployment. Australian unemployment found a low of 4.1% in March 2008. That low in unemployment has never been tested again this century. This article discusses the relationship between unemployment, inflation and the direction of future interest rate movements. (VIEW LINK)
Never miss an update
Enjoy this wire? Hit the ‘like’ button to let us know.
Stay up to date with my current content by
following me below and you’ll be notified every time I post a wire
Michael was an Australian Trade Commissioner serving in Saudi Arabia and Indonesia. He joined Morgans (now Morgans Financial Limited) in Sydney in 1988. He was Chief Institutional Options Dealer until moving to Brisbane in 1990 as Economist and Strategist. He joined the Board of Morgan Stockbroking in 1996. He became Director of Strategy and Chief Economist in 1998. Michael has served on many Queensland Government advisory committees. He was Chairman of the Queensland Food Industry Strategy Committee in 1992, a Member of the Consultative Committee of the Ipswich Development Board in 1993, a Member of the Queensland Tourism Strategy Committee in 1994 and a Member of the Ministerial Advisory Committee on Economic Development in 1997. From 2003 to 2012, he was Chairman of the Advisory Committee of School of Economics and Finance at the Queensland University of Technology. He has been a Governor of the American Chamber of Commerce from 1997 to 2007. In 2008, Michael joined the Board of The City of Brisbane Investment Corporation Pty Ltd. Michael was the President of the Economic Society of Australia (Qld) Inc from 2009 to 2013. He is now the immediate post President.
3 topics
Michael Knox
Director of Strategy and Chief Economist
Morgans
Michael was an Australian Trade Commissioner serving in Saudi Arabia and Indonesia. He joined Morgans (now Morgans Financial Limited) in Sydney in 1988. He was Chief Institutional Options Dealer until moving to Brisbane in 1990 as Economist and...
Expertise
No areas of expertise
Michael Knox
Director of Strategy and Chief Economist
Morgans
Michael was an Australian Trade Commissioner serving in Saudi Arabia and Indonesia. He joined Morgans (now Morgans Financial Limited) in Sydney in 1988. He was Chief Institutional Options Dealer until moving to Brisbane in 1990 as Economist and...
Expertise
No areas of expertise
Comments
Comments
Sign In or Join Free to comment