Australia central bank still seeking solution to policy puzzle: deputy governor

FILE PHOTO - Business people walk outside the Reserve Bank of Australia in Sydney
FILE PHOTO – Business people walk outside the Reserve Bank of Australia (RBA) in Sydney May 5, 2015. REUTERS/Jason Reed/File Photo

April 10, 2019

By Swati Pandey

ADELAIDE (Reuters) – Australia’s central bank is keeping a close eye on how the divergence between a seemingly slowing economy and a strong labor market resolves itself to help determine where policy rates are headed, a senior official said on Wednesday.

Economic growth in Australia slowed sharply in the second half of 2018 and the new year also got off to a shaky start. At the same time, the jobs market has continued to strengthen with the unemployment rate at an eight-year trough of 4.9 percent.

“A critical question is which of these is providing the best signal of the global growth impulse? Is it GDP or the labor market? How can we reconcile the difference?” Reserve Bank of Australia (RBA) Deputy Governor Guy Debelle said in a speech in Adelaide.

The RBA has left rates at a record low 1.50 percent since August 2016 and recently shifted away from its long-held tightening bias to signal rates could move in either direction, depending on data.

(Reporting by Swati Pandey and Wayne Cole)

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