Key Highlights

• Deputy Governor Andrew Hauser delivered the Sir Leslie Melville Lecture on 5 November 2026.

• He argued that trust is integral to how Monetary Policy actually works.

• Independence gives a Central Bank freedom to make unpopular decisions, while trust helps those decisions work.

• Hauser said trust must be earned and does not mean unconditional approval.

Two days after the Reserve Bank lifted the cash rate target, Deputy Governor Andrew Hauser used a Canberra lecture to argue that public trust is not a soft extra for a central bank but part of the machinery of monetary policy.

Central bankers usually talk about interest rates, Inflation and jobs. On 5 November 2026, Deputy Governor Andrew Hauser chose a different subject: trust. Delivering the Sir Leslie Melville Lecture at the Australian National University in Canberra, under the title "Trust, Expectations and Monetary Policy", he opened with a simple line: "Trust is central to all of our lives."

The lecture came two days after the Monetary Policy Board raised the cash rate target by 25 basis points to 4.85 per cent, in a majority decision. Its timing gave added weight to a question that sits beneath every rate decision: why should people believe the RBA will bring inflation back to target?

What the survey found

Mr Hauser drew on the RBA's Community Research Survey, which began in February 2025. It has now run across four waves, reaching 12,000 Australians, with the latest wave conducted in September 2026.

The headline finding is that about 55 per cent of respondents have "high" or "moderately high" trust in the RBA. Mr Hauser also highlighted the stability of that result: "Strikingly, our overall trust measure has been broadly stable, or even slightly up, over the past 18 months."

That stability is notable given the backdrop. Inflation remains elevated, with headline inflation of 3.9 per cent over the year to the September quarter and trimmed mean inflation of 3.7 per cent, according to the November Statement on Monetary Policy. Mr Hauser acknowledged the pressure directly: "Just as we need it most, trust is under strain."

Why trust is part of how policy works

The core of Mr Hauser's argument was that trust has a practical function. "But few rely on trust as profoundly as central banks," he said. "So trust isn't just a source of legitimacy – it's integral to how monetary policy actually works."

The reasoning runs through inflation expectations. If households and businesses believe the central bank will bring inflation down, they are less likely to set prices and wages on the assumption that high inflation will persist. That, in turn, makes the central bank's Job easier.

Mr Hauser offered evidence for this channel from a Macquarie University Business survey. It found that firms expecting a faster return to target planned to pass on less of their Middle East conflict-related costs. In other words, confidence in the RBA appeared to influence how much of a cost shock businesses intended to pass through to customers.

This connects closely to what Governor Michele Bullock said on 3 November: "It is critical that we stop expectations for high inflation from becoming embedded in price-setting decisions". Trust, on Mr Hauser's account, is one of the tools that helps prevent that embedding.

Independence in a global context

The lecture also placed the RBA within a broader international pattern. Mr Hauser noted that nine in 10 countries delegate monetary policy to operationally independent central banks. Since the COVID period, 83 per cent of central banks have remained as independent as before and 15 per cent have become more independent.

Independence and trust are linked, but they are not the same thing. Independence gives a central bank the freedom to make unpopular decisions; trust helps those decisions work. Mr Hauser was explicit that trust cannot be taken for granted: "That trust must be earned."

He also drew on Australian economic history to illustrate what is at stake when economic management fails. Australian GDP fell nearly 7 per cent in 1931, and Unemployment reached nearly 30 per cent in 1932. Those figures, from the Great Depression era, serve as a reminder of how severe economic dislocation can become.

Trust is not approval

One of the lecture's more pointed lines was a distinction between trust and agreement. "Trust does not mean unconditional approval," Mr Hauser said.

That distinction matters at a time when the RBA is raising rates and some borrowers are under pressure. A person can disagree with a particular decision while still trusting that the institution is acting in good faith and in line with its mandate. The November decision itself reflected disagreement within the Board: six members voted to increase the cash rate, while three voted to leave it unchanged at 4.60 per cent.

Mr Hauser also cautioned against complacency in the other direction: "A reserve of trust is not a licence to disappoint." Put simply, a reasonably high level of trust today does not guarantee it will survive a prolonged Failure to Deliver on inflation.

Putting current conditions in perspective

Mr Hauser noted that the misery index, which adds the inflation rate and the unemployment rate together, is only a little above its 15-year pre-COVID average. That suggests that, while conditions are uncomfortable, they are not extreme by recent historical standards.

The RBA's forecasts, however, show some discomfort lasting. The Board's statement said "Inflation is now forecast to remain elevated through much of 2027", and the SMP Overview says "The unemployment rate is forecast to rise to a bit over 5 per cent by end-2028." Holding on to public trust through that stretch is the challenge Mr Hauser described.

He also pointed to one of the ways the RBA keeps in touch with the economy: its liaison program, which involves around 900 meetings a year. That kind of regular contact is one practical way an institution can stay connected with the people its decisions affect.

The bottom line

Andrew Hauser's lecture made the case that public trust is central to how monetary policy works, not merely to the RBA's legitimacy. The RBA's own survey of 12,000 Australians puts trust at about 55 per cent "high" or "moderately high", and broadly stable over the past 18 months, even as inflation runs above target. But Mr Hauser was clear that this reserve is conditional: trust must be earned, it is not the same as approval, and it is not a licence to disappoint. With inflation forecast to stay elevated through much of 2027, that reserve is likely to be tested.