Australian Inflation Stays Strong, Highlighting Challenge Facing RBA

SYDNEY—Australian consumer price inflation remained strong in the latest quarter, illustrating the challenge the country’s central bank faces in bringing inflation back to target and adding uncertainty around the timing of interest-rate cuts.

The consumer-price index rose by 3.6% in the March quarter from a year earlier, meaning the annual inflation rate is now more than half of its peak at the end of 2022, data from the Australian Bureau of Statistics showed. Still, CPI rose by 1.0% on a quarterly basis, accelerating from the 0.6% increase recorded for the three months through December.

The ABS’s monthly CPI indicator rose 3.5% in the 12 months to March.

Housing and education were again among the main drivers of inflation in the March quarter. “Rents continue to increase at their fastest rate in 15 years,” Michelle Marquardt, head of price statistics at the ABS, said on Wednesday.

Central banks around the world are finding the last mile in their battle to tame inflation to be the hardest since they began raising interest rates at an unprecedented clip in the aftermath of the Covid-19 pandemic. That challenge has led to a redrawing of expectations around when central banks will start to loosen policy and provide borrowers with relief on debt costs.

In the U.S., stubborn inflation persisted in March, derailing the case for the Federal Reserve to begin reducing interest rates in June. Higher-than-expected CPI rattled asset classes, pushing stocks down on the day that the report was released and driving up bond yields.

Many of the drivers of inflation in the U.S. also confront the Reserve Bank of Australia in its deliberations around when to pivot toward a dovish stance on rates. Global energy prices are higher on geopolitical tensions, which is significant for Australia as a large importer of crude oil.

Still, Australia also faces domestic price pressures in areas such as healthcare and housing that complicate the RBA’s efforts to get inflation back into its 2% to 3% target band by the end of next year and muddy the outlook for interest rates.

The next few months are likely to witness such events as a reasonably big rise in the minimum wage of Australian workers and the delivery of generous income tax cuts midyear. These will coincide with a federal budget that is likely to include new spending measures designed to take the pain out of rising living costs.

As a result, economists are divided over whether the RBA will be confident enough that inflation is under control to cut interest rates this year, and some think it will be the last major central bank to loosen policy.

The Australian dollar strengthened against the greenback as investors bet on the RBA staying on hold for longer in the wake of the CPI data. Australian government bonds slumped in response to the strong inflation data, with both 2- and 10-year yields rising after the release.

Westpac on Wednesday scrubbed its call that the central bank would lower interest rates in September, instead seeing a maiden cut in November.

“All told, the data reinforce our conviction that the RBA is unlikely to cut rates before 4Q,” said Abhijit Surya, Australia and New Zealand economist at Capital Economics. “If anything, the slew of upside surprise raise the risk that the bank will feel the need to hike rates further.”

There has rarely, if ever, been so much tech talent available in the job market. Yet many tech companies say good help is hard to find.

What gives?

U.S. colleges more than doubled the number of computer-science degrees awarded from 2013 to 2022, according to federal data. Then came round after round of layoffs at Google, Meta, Amazon, and others.

The Bureau of Labor Statistics predicts businesses will employ 6% fewer computer programmers in 2034 than they did last year.

All of this should, in theory, mean there is an ample supply of eager, capable engineers ready for hire.

But in their feverish pursuit of artificial-intelligence supremacy, employers say there aren’t enough people with the most in-demand skills. The few perceived as AI savants can command multimillion-dollar pay packages. On a second tier of AI savvy, workers can rake in close to $1 million a year .

Landing a job is tough for most everyone else.

Frustrated job seekers contend businesses could expand the AI talent pipeline with a little imagination. The argument is companies should accept that relatively few people have AI-specific experience because the technology is so new. They ought to focus on identifying candidates with transferable skills and let those people learn on the job.

Often, though, companies seem to hold out for dream candidates with deep backgrounds in machine learning. Many AI-related roles go unfilled for weeks or months—or get taken off job boards only to be reposted soon after.

Playing a different game

It is difficult to define what makes an AI all-star, but I’m sorry to report that it’s probably not whatever you’re doing.

Maybe you’re learning how to work more efficiently with the aid of ChatGPT and its robotic brethren. Perhaps you’re taking one of those innumerable AI certificate courses.

You might as well be playing pickup basketball at your local YMCA in hopes of being signed by the Los Angeles Lakers. The AI minds that companies truly covet are almost as rare as professional athletes.

“We’re talking about hundreds of people in the world, at the most,” says Cristóbal Valenzuela, chief executive of Runway, which makes AI image and video tools.

He describes it like this: Picture an AI model as a machine with 1,000 dials. The goal is to train the machine to detect patterns and predict outcomes. To do this, you have to feed it reams of data and know which dials to adjust—and by how much.

The universe of people with the right touch is confined to those with uncanny intuition, genius-level smarts or the foresight (possibly luck) to go into AI many years ago, before it was all the rage.

As a venture-backed startup with about 120 employees, Runway doesn’t necessarily vie with Silicon Valley giants for the AI job market’s version of LeBron James. But when I spoke with Valenzuela recently, his company was advertising base salaries of up to $440,000 for an engineering manager and $490,000 for a director of machine learning.

A job listing like one of these might attract 2,000 applicants in a week, Valenzuela says, and there is a decent chance he won’t pick any of them. A lot of people who claim to be AI literate merely produce “workslop”—generic, low-quality material. He spends a lot of time reading academic journals and browsing GitHub portfolios, and recruiting people whose work impresses him.

In addition to an uncommon skill set, companies trying to win in the hypercompetitive AI arena are scouting for commitment bordering on fanaticism .

Daniel Park is seeking three new members for his nine-person startup. He says he will wait a year or longer if that’s what it takes to fill roles with advertised base salaries of up to $500,000.

He’s looking for “prodigies” willing to work seven days a week. Much of the team lives together in a six-bedroom house in San Francisco.

If this sounds like a lonely existence, Park’s team members may be able to solve their own problem. His company, Pickle, aims to develop personalised AI companions akin to Tony Stark’s Jarvis in “Iron Man.”

Overlooked

James Strawn wasn’t an AI early adopter, and the father of two teenagers doesn’t want to sacrifice his personal life for a job. He is beginning to wonder whether there is still a place for people like him in the tech sector.

He was laid off over the summer after 25 years at Adobe , where he was a senior software quality-assurance engineer. Strawn, 55, started as a contractor and recalls his hiring as a leap of faith by the company.

He had been an artist and graphic designer. The managers who interviewed him figured he could use that background to help make Illustrator and other Adobe software more user-friendly.

Looking for work now, he doesn’t see the same willingness by companies to take a chance on someone whose résumé isn’t a perfect match to the job description. He’s had one interview since his layoff.

“I always thought my years of experience at a high-profile company would at least be enough to get me interviews where I could explain how I could contribute,” says Strawn, who is taking foundational AI courses. “It’s just not like that.”

The trouble for people starting out in AI—whether recent grads or job switchers like Strawn—is that companies see them as a dime a dozen.

“There’s this AI arms race, and the fact of the matter is entry-level people aren’t going to help you win it,” says Matt Massucci, CEO of the tech recruiting firm Hirewell. “There’s this concept of the 10x engineer—the one engineer who can do the work of 10. That’s what companies are really leaning into and paying for.”

He adds that companies can automate some low-level engineering tasks, which frees up more money to throw at high-end talent.

It’s a dynamic that creates a few handsomely paid haves and a lot more have-nots.

Australian Inflation Stays Strong, Highlighting Challenge Facing RBA

Housing and education were among the main drivers of inflation in the March quarter

A divide has opened in the tech job market between those with artificial-intelligence skills and everyone else.

Playing a different game

Overlooked