Highlights

  • Unemployment reached 4.6%, according to data available at the September meeting, up from a low of around 3.5%.
  • Board member Iain Ross noted unemployment was around 4.5% in July, indicating the labour market had already been loosening.
  • Sarah Hunter stated the RBA does not want to generate a recession and sees no signs of one in current data.
  • Bullock and Ross both said there is no wage-price spiral developing in the Australian economy.

The RBA's September 2026 rate decision was not made without dissent in the deliberations. The minutes of the Board's meeting recorded that some members raised the risk of worse labour market outcomes as a reason to hold the cash rate rather than raise it. The argument was heard but did not prevail.

The Employment Argument in the Minutes

The September Board minutes recorded that members considered downside risks to employment as part of the deliberations. A case was made that these risks warranted holding the cash rate rather than increasing it. The argument reflected concern that the economy was already absorbing four rate increases in 2026 and that the labour market had been deteriorating.

Board member Iain Ross noted at the Senate hearing that unemployment had been around 4.5% in July, signalling awareness among members that the labour market had already been loosening before the September decision.

What Hunter Said About Recession

Sarah Hunter addressed the recession question directly. In a 60 Minutes interview published 25 October 2026 after being pre-recorded on 21 October, she said: "We don't see any signs of that yet in any of the data that we track." She was equally direct about the RBA's intent: "We don't want to generate a recession."

The word "yet" in both responses reflects the RBA's position that the data does not currently show deterioration consistent with recession, while maintaining appropriate caution about the future. Hunter has consistently framed higher rates as a tool that imposes real costs but avoids greater damage from persistent inflation.

Labour Market Tighter Than Judged

Despite the rise in unemployment, the Board's overall assessment was that the labour market remained tighter than previously judged. This reflects a view that conditions, while loosening, had not deteriorated to the extent the numbers might suggest at first glance. Weak productivity growth was cited as a contributing factor to the persistence of inflationary pressure in the labour market context.

Both Bullock and Ross stated that wages are not driving inflationary pressure in the way a classic wage-price spiral would require. This view was central to the Board's assessment that raising rates was appropriate without exacerbating a feedback loop between wages and prices.