Why the RBA has been so chill about putting jobs on the line

June 26, 2026 — 3:00am

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There’s a reason why the Reserve Bank has seemed so relaxed about the effect its interest rate hikes might have on people’s jobs – and it’s not because the bank is heartless, cold or even just hell-bent on getting prices to stop surging at all costs.

The RBA’s focus over the past few years has skewed towards softening price growth over protecting jobs despite its “dual mandate”: its equal responsibilities to keep inflation low and stable, and to keep most people in their jobs.

That’s largely because while unemployment has remained near historically low levels, prices have stubbornly continued to rise much faster than the 2 to 3 per cent a year that the bank – and many of us – are comfortable with.

RBA governor Michele Bullock has also repeatedly reminded us that while people losing their jobs – or struggling to find one – is not ideal, higher prices affect everyone, and especially those on lower incomes who spend a larger share of their income just on everyday necessities.

But there’s another reason why the bank has not been as worried as some economists have been about the possibility of people losing their jobs as it lifts interest rates to slow down the economy.

And it comes down to the relationship between inflation and unemployment which RBA deputy governor Andrew Hauser spelled out in a speech this week.

Many of us know the relationship between inflation and unemployment is generally – although not always – inverse.

That is: when unemployment is high, and more people are on stand-by (therefore indicating we have spare capacity in the economy), businesses don’t have to pay as much to attract and keep workers, and they tend to lift their prices more slowly.

And when unemployment is low, meaning we’re running low on workers that businesses can recruit to help boost supply to keep up with demand, prices tend to........

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