Central bank rates outlook may pivot on wages, labour

Core Viewpoint - The Commonwealth Bank of Australia suggests that the Reserve Bank of Australia (RBA) may justifiably maintain its current interest rate stance based on new wage and employment data [1][5]. Wage Data - The CBA's inaugural Wage and Labour Insights report indicates a wage increase of 0.8% in November, with an annual growth rate of 3.2%, up from 3.1% the previous month but below the late 2024 peak of 4.1% [4]. - The report is based on de-identified salary flows from approximately 400,000 bank accounts [4]. Employment Data - Employment numbers are expected to show the creation of over 25,000 new jobs in November, with a trend employment growth of 26,000, leading to a seasonally adjusted unemployment rate of 4.4% [5]. - This slight increase in employment growth supports a cautious approach by the RBA regarding interest rates [5]. Economic Outlook - The consensus among economists is for no change in the cash interest rate, currently at 3.60%, with predictions of no changes through 2026 [8]. - Recent inflation data for October shows annual prices rising by 3.8%, exceeding the RBA's target band upper limit of 3% [8]. - Economic growth for the year ending September was reported at 2.1%, indicating a stable economic condition in Australia [9].