Philip Lowe RBA 2018 economic data housing prices unemployment income
RBA governor Philip Lowe (Image: AAP/Dean Lewins)

The Morrison government may have secured a parliamentary majority but the Reserve Bank has voted no confidence in its economic management, taking the unusual step of flagging that it will be likely to cut interest rates at its next meeting due to concerns about unemployment.

In both a major speech yesterday by governor Philip Lowe and in the minutes of its May meeting, the bank yesterday explained that it believed there was persisting spare capacity in the economy, the rate of unemployment at which inflation would start to rise was lower than previously thought and that the jobs market was now softening. Lowe was about as blunt as a central banker could be about what the board is thinking: