Sarah Hunter, Assistant Governor for Economics at the Reserve Bank of Australia, stated that bringing inflation back within the 2-3% target band may require economic growth below trend and potentially higher unemployment. Australia’s cash rate currently stands at 4.35% following three rate hikes in 2026, and the RBA forecasts unemployment rising to 4.6% to sustainably bring inflation within target. Hunter drew a parallel with the early 1990s recession, when unemployment peaked above 10%. She also warned about geopolitical factors, particularly elevated oil prices, which could push inflation expectations higher.
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