Reality check: Why we need to brace for higher for longer rates

The strong local jobs markets and patience from the US Federal Reserve will delay local interest rate cuts and undermine critics who claim the RBA has lifted rates too high.

John KehoeEconomics editor

Updated Mar 22, 2024 – 11.32am, first published at 10.59am

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One week does not make a trend in the volatile world of economics, but local and international events of the past few days give credence to the minority view that emerged at the start of this year that the Reserve Bank of Australia will struggle to cut interest rates by much, if at all, in 2024.

Critics of the RBA who claimed the central bank made a mistake raising interest rates in November are now looking a bit alarmist. We learnt this week that the official unemployment rate fell to 3.7 per cent in February, back to low levels recorded in August 2023, and not far off the 50-year-low of 3.5 per cent.

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John KehoeEconomics editorJohn Kehoe is economics editor at Parliament House, Canberra. He writes on economics, politics and business. John was Washington correspondent covering Donald Trump’s first election. He joined the Financial Review in 2008 from Treasury.