Bullock Calls for Higher Unemployment to Tame Inflation

Reserve Bank of Australia governor Michele Bullock stated that the unemployment rate will need to reach as high as 5 per cent in order to rein in inflation. Speaking at a Committee for Economic Development of Australia event in Sydney, Bullock emphasized the importance of keeping inflation expectations in check ahead of next week's board meeting.

The central bank still considers the labour market 'tight', according to Bullock. This suggests that any increase in unemployment would be a deliberate attempt to combat rising prices.

Bullock's comments come as the RBA is expected to raise interest rates at its upcoming board meeting on September 28-29. With inflation remaining a concern, the central bank will need to carefully balance the need for economic growth with the need to control price increases.