Homeowners breathed a sigh of relief this week after the Central Bank announced it would leave interest rates alone, but the reprieve could be short-lived.

A surprise drop in unemployment figures released yesterday has already sparked speculation that an interest rate rise is on the horizon.

The unemployment rate fell to 4.9% in March with total employment up 37.8k. Leading indicators of employment suggest the rate will hover at this relatively low level in coming months.

An economics report from St.George indicated that the jobless rate will keep the Reserve Bank ready to tap on the brakes again later this year.

“We still expect the Reserve Bank to resume tightening in Q3 but there remains a risk of an earlier move,” the report stated.

Full-time jobs jumped 32.1k in March and have risen 70.9k in the March quarter. Full-time employment grew at an annual rate of 4% in March – the fastest its grown in nearly three and a half years.

Meanwhile part-time jobs made more modest gains of 5.7k in March, after a huge fall in February.
The RBA held the official cash rate at 4.75% for the fifth month in a row earlier this week in reaction to sign