RBA Governor Says Risks Skewed to Upside Amid Labor Market Strength

RBA Governor Michele Bullock said that at the August board meeting, risks to the outlook were skewed to the upside. This means that there was a greater likelihood of positive outcomes for the economy.

Bullock noted that labor market conditions are near full employment but slightly tighter than expected. However, since then, developments have indicated that while growth in the Australian economy is slowing, some upside risks to inflation seem to be materializing.

The RBA's liaison program shows that many firms are passing on higher input costs, which could lead to increased inflation. Recent figures suggest that demand growth will ease in H1 2026, but the housing market has softened more than expected, potentially weighing on economic activity.