As highlighted in our recent Quarterly Bulletin article, the expansion of employment in the last two years has been fuelled by a large expansion of the labour force, which grew from 2.43 to 2.68 million between 2019 and 2022.
From the standpoint of firms and households, funding rates change in line with a change in the policy interest rate, and this will affect their decisions to invest in equipment and housing. Another possible route operates via changes in foreign exchange rates affecting either the profitability or the volume of exports.