RBA Eyes Higher Unemployment to Tame Inflation

RBA Governor Michele Bullock said that unemployment may need to rise to tame inflation. Speaking at a business event, she noted that the current unemployment rate of 4.5% is at the lower limit of what the RBA thinks will bring down inflation to an acceptable level.

Bullock emphasized that the labour market remains tight and inflation is too high. She stated that there are certain levels of unemployment that can put upward pressure on wages and prices, making it difficult for businesses to control costs.

The RBA governor suggested that allowing the unemployment rate to edge higher, between 4.5% and 5%, would likely take enough heat out of the labour market to ease pressure on inflation.