Home topics news Source: Spelio on Flickr News News Tight jobs market pushes RBA closer to February interest rate hike Yajush Gupta January 26, 2026 CreditorWatch’s Ivan Colhoun weighs in on whether the RBA will raise rates in early February. What’s happening : The unemployment rate averaged 4.2% for the December quarter, below the Reserve Bank of Australia’s estimates and reinforcing views that labour conditions remain tight. Why this matters : The stronger-than-expected employment data complicates the RBA’s monetary policy stance, with major economists now predicting a 25 basis point interest rate increase at the central bank’s early February meeting. Australia’s labour market finished 2024 on a surprisingly strong note, defying expectations and potentially forcing the Reserve Bank of Australia’s hand on interest rates. The Australian Bureau of Statistics reported that employment rose by 65,000 in December, more than reversing the 29,000 decline recorded in November. The unemployment rate fell to 4.1%, significantly lower than market forecasts of 4.4%. “This month we saw more 15-24 year olds moving into employment, contributing to the rise in overall employment and the fall in the unemployment rate,” Australian Bureau of Statistics said Sean Crick, ABS head of labour statistics. December employment surge The data represents a significant turnaround from November’s peculiar employment decline. CreditorWatch Chief Economist Ivan Colhoun notes that monthly employment changes can be very volatile, and falls in employment are usually reversed within one month. “While we can debate the volatility of the monthly Australian labour market data, the broad indication