CBA has dropped its end of 2021 Australian unemployment rate forecast to 5% from 5.5%

Author: Eamonn Sheridan | Category: News

Commonwealth Bank of Australia analysts ahead of this week's jobs report (Thursday local time).

The lowering of the forecast to 5% from prior forecast of 5.5% is significant. The Reserve Bank of Australia is targeting lower unemployment reasoning that this will exert pressure for higher wages and thus higher inflation, and, eventually, a tightening of monetary policy. 

Having said this, the thing to watch for a likely rate hike (some distance off in the future for now) is if the unemployment rate falls to between the "low 4s" and "high 3s" (that's what Reserve Bank of Australia deputy governor Guy Debelle most recently said). 

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CBA also forecast 4.7% at end-2022 (from 4.8%)

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