Reserve Bank deputy gives economic update

Colin Brinsden, AAP Economics and Business CorrespondentAAP
Market watchers will be closely monitoring Guy Debelle's speech for any hints on interest rates.
Camera IconMarket watchers will be closely monitoring Guy Debelle’s speech for any hints on interest rates.

A speech by Reserve Bank deputy governor Guy Debelle comes at a critical time for the Australian economy and may clear up whether the central bank intends to take any further action on interest rates.

Mr Debelle will address an Australian Industry Group conference on Tuesday on the Australian economy and monetary policy.

It comes just days after official figures showed unemployment unexpectedly fell in August to 6.8 per cent, when economists had expected a further rise given the harsh COVID-19 lockdown in Melbourne.

The Reserve Bank and Treasury have forecast the jobless rate rising to 10 per cent by the end of the year.

Mr Debelle’s speech will be scrutinised for any follow-up comment to the Reserve Bank’s signal at its last board meeting that it “continues to consider how further monetary measures could support the recovery.”

That meeting came the day before the national account confirmed Australia was in its first recession in nearly 30 years as the economy contracted by a hefty seven per cent in the June quarter.

There has been speculation the central bank could trim the already record low cash rate of just 0.25 per cent.

The interest rate futures market is implying a rate of 0.1 per cent by year’s end.

AMP Capital chief economist Shane Oliver expects the central bank could ease the cash rate at its next meeting on October 6 to coincide with the release of the 2020/21 federal budget, to present a “united Team Australia front”.

The Australian Bureau of Statistics will release its weekly payroll jobs data on Tuesday, an additional series set up to give a more frequent gauge on the state of the economy during the pandemic.

The weekly ANZ-Roy Morgan consumer confidence survey is also due.

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