The head of the Reserve Bank has cautioned against overreaction to Australia's rising unemployment rate, saying the figure remained low, despite reaching a 12-year high in January.
Unemployment jumped to 6.4 per cent last month, official figures on Thursday showed - its highest level since 2002.
In his bi-annual testimony to a parliamentary committee on Friday, Mr Stevens said unemployment was now expected to peak higher than originally forecast, as the economy continues to grow below-trend.
But he cautioned against overreaction to the surprise jump in unemployment in January, saying it was important to look at the trend.
"It's always unwise to react too strongly to one monthly number," Mr Stevens said.
"We need to step back from monthly ups and downs ... and try to distil what the trend is."
The trend is that unemployment is slowly creeping up because the economy is not growing enough jobs to keep up with labour force growth, Mr Stevens said.
But although unemployment was rising, it still remained low, he said.
"By the historical standards of my professional career, that remains low," Mr Stevens said.
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