Key Highlights

Hunter said oil-driven price pressure is still coming through and things will get a little bit worse before they improve.

September CPI, released three days after the broadcast, showed fuel prices up 9.4 per cent in the month and 23.6 per cent over the year.

She declined to signal the Board's decision and said the RBA does not see signs of recession yet.

Reserve Bank Assistant Governor Sarah Hunter has cautioned that oil-driven price pressure is still working its way through the economy, and that things will get "a little bit" worse before they improve.

When the Reserve Bank of Australia's (RBA) Assistant Governor (Economic), Sarah Hunter, sat down with 60 Minutes interviewer Adam Hegarty, the conversation offered a plain-language window into how the central bank sees the months ahead.

The interview was recorded on 21 October 2026 and broadcast on 25 October 2026. Among its most notable messages was a warning about oil. According to the RBA's record of the interview, Ms Hunter said oil-driven price pressure is still coming through, and that things will get "a little bit" worse before they improve.

It was a candid assessment. It was also notably measured: "a little bit" is not the language of alarm. But it signalled that the RBA does not believe the energy shock has finished flowing into Australian prices.

Two challenges, not one

Ms Hunter framed the RBA's task as dealing with two separate problems at once. The first is an overseas oil shock. The second is excess domestic demand relative to what the economy can sustainably supply.

That distinction helps explain her warning. An oil shock tends to show up first in fuel prices, then gradually in the costs of transporting goods and running businesses. If those second-round effects are still arriving, then near-term inflation figures may continue to reflect the shock even after the initial jump at the bowser.

Excess domestic demand is a separate problem, and one the RBA considers more directly within its reach. "We know that higher interest rates will bring inflation down," Ms Hunter said in the interview.

What the data showed days later

Three days after the broadcast, on 28 October 2026, the Australian Bureau of Statistics (ABS) released the September 2026 Consumer Price Index. The figures covered a period before the interview went to air, but they gave a clear picture of the oil effect.

Automotive fuel prices rose 9.4 per cent in the month of September and 23.6 per cent over the year, which the ABS attributed to higher world oil prices. The Transport group rose 8.7 per cent annually.

Headline CPI rose 4.3 per cent over the 12 months to September, up from 4.0 per cent in August. In the month, it rose 0.8 per cent in original terms and 0.6 per cent seasonally adjusted. Underlying inflation, measured by the trimmed mean, was 3.6 per cent annually, with a monthly rise of 0.3 per cent seasonally adjusted.

The gap between those monthly headline and trimmed mean figures is consistent with large moves in a handful of items, fuel prominent among them.

Governor Michele Bullock delivered a similar message to the Senate Economics Legislation Committee on 28 October 2026. She told senators that "global energy prices are now much higher than had been assumed in the August forecasts" and that "Inflation will therefore likely be higher than was our base case in August."

She also said the Middle East conflict has re-escalated, that short-term inflation expectations are elevated, and that the full effects of recent rate rises are yet to be felt.

That last point offers a counterweight. While oil-related pressure may still be building, so too is the impact of tighter monetary policy. The Monetary Policy Board's statement of 29 September noted that "The three increases in the cash rate target since the beginning of the year have tightened financial conditions", before the Board added a fourth in the same meeting.

Why interest rates, and why not a recession call

Ms Hunter used part of the interview to explain why the RBA relies on interest rates. She pointed back to policies tried in earlier decades, including 1970s price controls, an early-1980s wage freeze and attempts to target credit or money. "What we learned through that sort of journey, none of those were particularly effective," she said.

"there's no painless tool, but this tool does work, and that's why we use it," she added. "It's not pain-free, it's not costless, but the cost of it is less using interest rates than it would be using other tools."

She also addressed concerns about borrowers. Most mortgage holders entered the rate-rise period with buffers such as offset savings, she said, and the RBA is not seeing systemic mortgage stress. "We're not trying to put people out of their homes," she said.

A warning that inflation will get a little worse before it gets better could be misread as gloom about the broader economy. Ms Hunter was careful to separate the two.

Asked about the risk of recession, she said: "We don't see any signs of that yet in any of the data that we track." She also said: "We're not trying to achieve a sharp stop or a really big downturn or anything like that."

She noted that higher rates are slowing housing, as intended, and that tax changes from the May budget are also having an effect.

What the warning does not say

Importantly, Ms Hunter's comment about oil pressure was not a signal about the RBA's next move. According to the RBA's record of the interview, she declined to signal the next decision.

The Board raised the cash rate target by 25 basis points to 4.60 per cent in September, effective 30 September 2026, its fourth increase this year. It said it would be "attentive to the data and the evolving assessment of the outlook and risks", with options "including increasing the cash rate target further if needed".

The Board's next decision, together with a new Statement on Monetary Policy, is scheduled for 2.30 pm AEDT on 3 November 2026. That decision has not been made. Ms Hunter is next scheduled to speak publicly at the UBS Australasia Conference on 9 November.

The bottom line

Sarah Hunter's warning that oil-driven price pressure will make things "a little bit" worse before they improve reflects the RBA's view that the energy shock has not fully passed through to Australian prices. The September CPI, released days later, showed fuel prices up 9.4 per cent in a single month.

Her broader message was that the RBA sees interest rates as an imperfect but effective tool, and that it is watching for both inflation and signs of economic stress. As she put it: "We don't want to live with high inflation for a long time."