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Investing.com-- Australia’s central bank chief, Michele Bullock, said on Thursday a "measured and gradual" approach to monetary policy easing remains appropriate as the labor market shows only modest softening despite progress in taming inflation.
Speaking at an event in Sydney, the Reserve Bank of Australia (RBA) governor noted that while the June monthly data showed a noticeable pick-up in the unemployment rate, other measures, such as the vacancy rate, have been stable recently.
"More broadly, leading indicators are not pointing to further significant increases in the unemployment rate in the near term," she added. The employment-to-population ratio remains near record highs, contrasting with declines seen in other advanced economies.
"Since February, we have reduced the cash rate by 50 basis points," Bullock said. "The Board continues to judge that a measured and gradual approach to monetary policy easing is appropriate."
The Australian dollar’s AUD/USD firmed 0.3% after the speech, on expectations of delayed, less aggressive rate cuts.
The remarks come after June quarter inflation fell to the lower half of the RBA’s 2-3% target band, though Bullock cautioned this partly reflected temporary cost-of-living relief measures.
Bullock highlighted how anchored inflation expectations allowed the RBA to pursue a less aggressive tightening path than global peers during the inflation fight. The cash rate peaked at 4.35% compared to higher levels elsewhere.
The governor reiterated the RBA stands ready to respond decisively to any global economic shocks, but noted that "the likelihood of a severe downside ‘trade war’ appears to have diminished."
"The best way to promote the economic welfare of Australians is by achieving low and stable inflation alongside full employment," Bullock concluded.