Economists say the Reserve Bank of Australia could allow a lower unemployment rate than previously thought without stoking inflation after the jobless rate dropped to 3.9 per cent this week.
But others warn the jobs market may now be running too hot to lower inflation to the midpoint of the 2 per cent to 3 per cent target, and a longer period of elevated interest rates will be required.
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John 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. Connect with John on Twitter. Email John at jkehoe@afr.com
Michael Read is the Financial Review's economics correspondent, reporting from the federal press gallery at Parliament House. He was previously an economist at the Reserve Bank of Australia and at UBS. Connect with Michael on Twitter. Email Michael at michael.read@afr.com
