Meta category: Economic news

Alongside official statistics, the Reserve Bank gathers intelligence from around 900 business liaison interviews each year, one of the ways it builds its picture of a labour market it still describes as a little tight.

Interest rate decisions are often portrayed as the product of spreadsheets and statistical releases. But part of what informs the Reserve Bank of Australia (RBA) comes from something far more old-fashioned: talking to people who run businesses.

Speaking on The Pay Off podcast with Sylvia Jeffreys on 22 September, Assistant Governor (Economic) Sarah Hunter said the RBA conducts around 900 liaison interviews with businesses across Australia each year.

That figure offers a glimpse into how the central bank tries to understand conditions on the ground, including in the jobs market, between the scheduled releases of official data.

What 900 interviews a year adds up to

As simple arithmetic (illustration only, not an RBA figure), around 900 interviews spread across a year works out to roughly 75 conversations a month, or more than 17 a week on average. That is a steady flow of first-hand information from firms in different industries and locations around the country.

Official statistics are vital, but they arrive with a lag and are summarised at a national level. Conversations with businesses can help fill in the story behind the numbers: how firms are approaching hiring, what they are seeing in demand, and how they are thinking about costs and prices. The RBA has not published, in the material covered here, a breakdown of what its most recent round of liaison found, so it would be wrong to attribute specific findings to it. What can be said is that liaison is one of the inputs that sits alongside the data when the Board forms its view.

Ms Hunter also used the podcast to touch on how financial conditions feel at the household level. She said she saw no signs of systemic financial distress, though individuals can struggle if their income changes. That distinction, between the system as a whole and the experience of particular people, is a recurring theme in how the RBA talks about the economy.

The labour market picture the RBA is working with

Whatever the source of its intelligence, the RBA's public assessment of the jobs market is clear.

At the 29 September media conference, Governor Michele Bullock said: "The unemployment rate is still quite low historically, and we still think the labour market is a little bit tight." She said unemployment "has risen from 3.5 per cent over the past couple of years to 4.6 per cent", and that more than a million jobs had been created over that period.

That 4.6 per cent is the most recent figure she cited. In her 18 September opening statement to the House of Representatives Standing Committee on Economics, she had described the rate as 4.5 per cent: "The unemployment rate – at 4.5 per cent – is low by historical standards."

Looking ahead, the August 2026 Statement on Monetary Policy said: "The unemployment rate is forecast to increase to 4.8 per cent by the end of 2028."

Importantly, the Governor rejected the idea that pay is fuelling the current bout of inflation. "There is no wage price spiral going on in Australia. Rises in wages are not driving these cost pressures," she said on 29 September.

So the RBA's view combines two ideas that can sound contradictory: a labour market that is still a little tight, but wage growth that is not the driver of today's cost pressures.

Why the business view matters right now

The RBA raised the cash rate target by 25 basis points to 4.60 per cent on 29 September, its fourth increase in 2026. The Board said recent data suggest growth and inflation in Australia have been higher than expected.

The business sector features prominently in that assessment. The Board's statement noted: "Growth in business investment and debt is strong." It also observed: "There are signs that growth in consumer spending is easing gradually as expected."

The Financial Stability Review, released on 1 October, offered a broader read on firms. It said: "Most businesses should be able to manage elevated cost pressures, although conditions are more challenging in some sectors." It noted that stress remains elevated in hospitality, construction and transport.

For a central bank trying to gauge how quickly demand is cooling, conditions at the level of individual businesses, including whether firms are still hiring, are an important piece of the puzzle. That is one reason the liaison program exists.

Reading the signals with the data

Liaison does not replace statistics, and the RBA's decisions draw on a wide range of indicators. The headline figures the Board is working with include:

  • Headline inflation of 4.0 per cent from the August monthly CPI indicator, according to the RBA homepage.
  • Underlying (trimmed mean) inflation of about 3.5 per cent for the past six months, according to the Governor.
  • A cash rate of 4.60 per cent, effective 30 September.
  • A GDP growth forecast of 1.4 per cent over the year to December 2026, from the August Statement on Monetary Policy.

The Governor also stressed the importance of expectations, which surveys and business conversations can both shed light on. "It's critical that we stop expectations for high inflation from becoming embedded in price-setting decisions," she said. The Board noted that "Short-term measures of inflation expectations remain elevated."

Ms Hunter also pointed out on the podcast that the effects of rate changes are uneven. If the RBA raises rates, a borrower's minimum repayment goes up, she said, though most borrowers have offset or redraw accounts and can choose to put more in. She added that rents move with demand and supply in local markets, rather than automatically with interest rates.

The bottom line

Around 900 business liaison interviews a year give the RBA a regular, ground-level view of the economy to set alongside official statistics. The Bank's public message on jobs is that unemployment, at 4.6 per cent, remains low historically and the labour market is still a little tight, even though wages are not driving current cost pressures. What to watch: the September meeting minutes on 13 October, the next CPI release on 28 October, and the November Statement on Monetary Policy on 3 November. Ms Hunter is also scheduled to speak at the UBS Australasia Conference on 9 November.