Australia's week ahead: RBA minutes, jobs data with unemployment at 4.6%

The minutes of the Reserve Bank's September meeting carry extra significance for the Australian dollar and short-term rates because the Governor's post-decision remarks were more dovish than the outcome. A record that points toward a pause would support market pricing for no change and could weaken the currency, while one that keeps further tightening explicitly in play would back Westpac's view of another move before year-end. Oil is the wild card in both scenarios, since the board specifically mentioned Middle East tensions affecting fuel prices; any fresh crude rally due to Gulf attacks would strengthen the inflation argument. A weaker-than-expected jobs number would intensify market concern about downside risks to growth.

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After four rate increases, the key question for Australia this week is whether the RBA's determination or the Governor's gentler language will better define the future policy direction.

Main points:

• The RBA's September meeting minutes, when the cash rate was raised 25 basis points to 4.60%, are released on Tuesday
• CBA will examine whether the minutes align with Governor Bullock's softer post-meeting tone and says the bar for another hike has become higher
• Westpac continues to predict one more increase, lifting the cash rate to 4.85% by December
• September labour force figures on Thursday are projected to show unemployment unchanged at 4.6%, the highest point since late 2021
• Westpac expects 20,000 new jobs, matching the consensus, while CBA forecasts a weaker 10,000 after August's surprise 40,000 gain
• Consumer confidence deteriorated after the September hike, and business conditions turned negative in August

Two key data releases will shape expectations for the Reserve Bank's next policy move this week: the minutes from the September policy meeting on Tuesday and the September labour force survey on Thursday. Both are scheduled for 11:30 am Sydney time, 00:30 GMT (8:30 pm ET the previous day).

In September, the RBA's Monetary Policy Board raised the cash rate by 25 basis points to 4.60% in a unanimous and widely anticipated decision, the fourth hike of this cycle. The board stated that inflation remained too high, pointing to domestic capacity pressures as well as global shocks from the Middle East conflict and the AI investment boom. It recognised that the economy was slowing and the labour market softening, but not enough to bring inflation back to target within a reasonable timeframe, especially given renewed pressure on oil prices.

CBA anticipates the minutes will illuminate the arguments for holding rates steady, and plans to watch whether they correspond with Governor Michele Bullock's more dovish press conference tone, where she noted that the four rate increases would take time to take effect. CBA believes the hurdle for a further hike is now elevated. Westpac takes a stronger stance, predicting one more increase to 4.85% by December, and says markets will turn to the minutes for clues on the outlook.

The rate rise has already affected households. Westpac's consumer sentiment index dropped 4.7% to 80.4 in October, near the weakest readings in the survey's history, with confidence among those surveyed after the decision much lower than those polled before it.

Thursday's employment data follows a surprise increase of around 40,000 in August that still pushed unemployment up to 4.6%, the highest since late 2021, as the participation rate rose to 67.1%, just below its record. Westpac projects a 20,000 rise in September, in line with the consensus, with participation easing to 67.0% and unemployment holding at 4.6%. It says cost of living pressures and higher interest rates are drawing more people into the workforce, keeping labour supply ahead of demand.

CBA forecasts a smaller 10,000 increase, noting its own internal data pointed to jobs growth closer to 20,000 per month, and also predicts unemployment at 4.6%. It warns the figures could be noisier than usual: a survey group with a very low jobless rate is rotating out, posing an upside risk, while August's rise may have been overstated and could partially reverse. CBA advises against interpreting any fall in unemployment as a change in trend, expecting the rate to gradually rise as the economy slows.

Separately, the NAB business survey on Tuesday follows August's decline in conditions into negative territory for the first time in six years.