Unwilling to admit the mistakes of the extent of its interest rate hiking cycle in 2023, the Reserve Bank of Australia (RBA) left interest rates steady after its regular board meeting.

It did acknowledge the tsunami of evidence showing weaker growth, rising unemployment and the free-fall in inflation all of which are pointing to economic policy being tight, which in turn means a risk of over achieving on the policy objectives of the RBA.

Already, GDP in per capita terms has fallen for three consecutive quarters, a horrible result for the well-being of the Australian population.

Do you have a story to tell? Contact yahoo.finance.au@yahooinc.com

This has been associated with inflation falling from a peak of 8.4 per cent to now be at 3.4 per cent. The drover’s dog can now see that inflation will fall to the RBA target in coming months as the economy remains sluggish.

RELATED

• RBA warning as Australia's underground recession continues

• RBA's 'blunt' rate hikes create $37.4 billion mortgage-holder divide

• Mortgage broker reveals 5 ‘dirty secrets’ the banks don’t want you to know

All of these factors are feeding into weakness in the labour market. The unemployment rate is now 4.1 per cent, up from the low of 3.4 per cent in late 2022. In human terms, the number of people unemployed has risen by 114,100 from the October 2022 low to over 600,000.

What’s more, the underemployment rate has risen from a low of 5.8 per cent of the workforce to 6.6 per cent. Underemployment is a measure of people who have a job but would prefer to work more hours.

Get the latest Yahoo Finance news - follow us on Facebook, LinkedIn and Instagram.

A rise in underemployment points to businesses cutting the hours – and pay – of casual, gig or part-time workers.

The RBA acknowledged this scorecard of disappointing news, adding that it estimates that wages growth has peaked, which is important in the interest rate cutting scenario that is rapidly unfolding.

Subtle change in RBA wording: 'Welcome to the real world'

In holding interest rates steady at its March meeting the RBA surprised no one. It was always going to be about what the RBA said in its statement, not what it did.

And this is where the change in language from the RBA was so important. No longer did it say that it considered increasing interest rates. Rather it moved to a position where in reference to the outlook for policy it “would not rule anything in or out”.

In other words, there was, at this stage, an even risk that the next move interest rates would be down as well as up.