Australia’s battle against inflation is far from over, Reserve Bank Chief Economist Sarah Hunter has warned, saying that returning price growth to target will take “some time” and may yet require further interest rate increases. She noted that demand has recently been expanding faster than its long-run trend while the economy is already operating close to full capacity, adding, “We expect the labor market will remain tight and inflation will remain above target for some time.”
At a Senate hearing, Governor Michele Bullock underscored that strong private demand, rather than fiscal policy, is the central challenge. She reiterated that the central bank remains prepared to raise rates again if inflation proves persistent, as renewed price pressures since late 2025 continue to cloud the outlook.
