SYDNEY, July 16 (Reuters) – Australia’s Treasurer Jim Chalmers said on Sunday he expected the country’s unemployment rate to rise from near a 48-year low on the back of higher interest rates and slowing global growth.
“With Reserve Bank and Treasury forecasts for inflation to moderate in the coming months, unemployment is also expected to rise,” Chalmers told the Australian Broadcasting Corp.
Amid persistently high inflation, the unemployment rate fell slightly to 3.6% in May, while analysts had expected it to be stable at 3.7%.
The Reserve Bank of Australia (RBA) has said the unemployment rate would need to rise to around 4.5% – still well below pre-pandemic levels – to bring the economy back into balance.
Unemployment is expected to “rise somewhat as the economy slows as a result of higher interest rates and global economic uncertainty,” Chalmers said before attending a meeting of finance ministers and central bankers in the Group of 20 (G20) in India outgoing RBA Governor Philip Lowe.
The RBA kept interest rates at an 11-year high of 4.10% this month after raising rates by 400 basis points since May last year, but warned that further tightening may be needed.
The decision came after June data from the Australian Bureau of Statistics showed Australia’s economy grew at its weakest pace in a year and a half in the most recent quarter, while showing signs of further weakening.
Reporting by Sam McKeith in Sydney; Edited by Jamie Freed
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