The RBA has primed the market for an interest rate rise. But what will it mean for unemployment? | Greg Jericho
News Source
β’Wed, 28 Oct 2026 14:00:06 GMT
π° What Happened
The Reserve Bank looks certain to raise interest rates on 3 November. Markets now put the chance at about 87%, up from 61% before the inflation data. Columnist Greg Jericho says the bank prepared the ground itself. Deputy governor Andrew Hauser told investors the outlook looked "materially worse" than forecast in August, and markets moved fast. Jericho notes a quirk in the data. The monthly inflation measure jumped to 4.3%, but the quarterly measure stayed at 3.9%. Most of the jump came from petrol, which rose 9.4% in September. Without fuel, inflation would be about 3.6%.
π The Backstory
Australia's unemployment rate has risen from 4.1% in January to 4.7% in September, a five-year high. Normally that would make the bank hold off on rate rises. In September, markets cut the odds of a hike to less than one in five. Then the bank spoke and the odds jumped back up. Governor Michele Bullock told a Senate hearing she is not worried about the pace of job losses. She said unemployment will probably have to rise further. Jericho argues this shows the bank cares far more about inflation than about full employment.
π― Why It Matters
Higher rates slow the economy and can cost jobs. If you are already worried about work, or pay a mortgage, the next few months look harder.
The Reserve Bank looks certain to raise interest rates on 3 November. Markets now put the chance at about 87%, up from 61% before the inflation data. Columnist Greg Jericho says the bank prepared the ground itself. Deputy governor Andrew Hauser told investors the outlook looked "materially worse" than forecast in August, and markets moved fast. Jericho notes a quirk in the data. The monthly inflation measure jumped to 4.3%, but the quarterly measure stayed at 3.9%. Most of the jump came from petrol, which rose 9.4% in September. Without fuel, inflation would be about 3.6%.
Australia's unemployment rate has risen from 4.1% in January to 4.7% in September, a five-year high. Normally that would make the bank hold off on rate rises. In September, markets cut the odds of a hike to less than one in five. Then the bank spoke and the odds jumped back up. Governor Michele Bullock told a Senate hearing she is not worried about the pace of job losses. She said unemployment will probably have to rise further. Jericho argues this shows the bank cares far more about inflation than about full employment.
Higher rates slow the economy and can cost jobs. If you are already worried about work, or pay a mortgage, the next few months look harder.