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Deputy Governor Andrew Hauser told ABC 7.30 that the Reserve Bank's rate rises are aimed at protecting the jobs gains made during COVID, an argument that turns a common assumption about interest rates on its head.

Higher interest rates are usually discussed as a cost to the economy: dearer mortgages, tighter business budgets and, eventually, fewer jobs. So it can sound contradictory when a central banker says rate rises are meant to protect employment.

That is exactly what Deputy Governor Andrew Hauser said in an interview with ABC 7.30 on 8 September 2026. Explaining why the Reserve Bank of Australia (RBA) had raised rates, he said: "We're doing it in order to try to protect the jobs gains that happened during COVID."

Three weeks later the Monetary Policy Board lifted the cash rate again, by 25 basis points to 4.60 per cent, the fourth increase of 2026. Mr Hauser's comment offers a useful window into the reasoning the RBA has been presenting to the public.

Two things to defend: price stability and jobs

Mr Hauser was blunt about the trigger for the RBA's actions. "Inflation is too high, and that's why we raise interest rates three times at the beginning of this year," he told 7.30.

Governor Michele Bullock has used almost identical language. In her opening statement to the House of Representatives Standing Committee on Economics on 18 September, she said: "Inflation is too high. We are focused on getting it back down and making sure that it does not become embedded."

The numbers back that assessment. Headline inflation, as measured by the August monthly CPI indicator, was 4.0 per cent, according to the RBA's homepage. Underlying inflation is lower but still above target: Ms Bullock said the trimmed mean measure has been about 3.5 per cent for the past six months. The RBA's target range is 2–3 per cent, with the aim of reaching the 2.5 per cent midpoint.

What, then, are the "jobs gains" Mr Hauser wants to keep? The labour market figures the Governor has cited give the answer.

At the 29 September media conference, Ms Bullock 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. She described the labour market as still somewhat stretched: "The unemployment rate is still quite low historically, and we still think the labour market is a little bit tight."

Those are the gains the RBA is talking about: a large number of new jobs and an unemployment rate that remains low by historical standards, even after drifting up.

Connecting the dots: why act on inflation to defend jobs?

The RBA's public statements suggest a chain of reasoning with three links.

First, inflation that lingers can become embedded. Ms Bullock said on 29 September: "It's critical that we stop expectations for high inflation from becoming embedded in price-setting decisions." The Board's statement that day noted that "Short-term measures of inflation expectations remain elevated."

Second, the RBA wants demand to cool for a while, not collapse. In her 18 September statement, the Governor said: "A period of subdued growth of aggregate demand is needed to reduce capacity pressures and bring inflation down sustainably." The emphasis is on a period of subdued growth, rather than a sharp contraction.

Third, the RBA does not see a recession as its main scenario. Asked about the risk at the media conference, Ms Bullock said: "That is not our central base case at this moment."

Read together, these comments describe an approach in which the RBA acts on inflation now, while the labour market is still in reasonable shape, to keep high inflation from becoming entrenched. Mr Hauser's framing, that rate rises are about protecting COVID-era jobs gains, is the employment side of that same story.

It is worth being careful about what the RBA has not said. It has not claimed that rate rises will leave unemployment unchanged. Its August forecasts expected the unemployment rate to rise: "The unemployment rate is forecast to increase to 4.8 per cent by the end of 2028." The argument, as presented, is about protecting the bulk of the gains, not avoiding any softening at all.

The cost-of-living dimension

Mr Hauser also gave a sense of why the RBA views inflation as so damaging. In the same interview, he said the price level in the economy had risen by "10, 15, 20 per cent higher than it should have done".

That remark speaks to the cumulative effect of inflation. Even if the annual rate eases, prices do not fall back to where they were; they simply rise more slowly from a higher base. For households, that is the lasting cost-of-living squeeze.

Assistant Governor (Economic) Sarah Hunter, speaking on The Pay Off podcast on 22 September, said the goal is for that squeeze to fade into the background as inflation eases.

Mr Hauser also offered a timeline. "Inflation is due to be back in target by the end of next year," he said, meaning back within the 2–3 per cent range by the end of 2027.

The trade-offs the RBA acknowledges

None of this makes rate rises painless, and the RBA has said as much. "I know this decision is difficult for households with a mortgage and businesses with loans," Ms Bullock said on 29 September. She also said scheduled mortgage payments, including interest, are back up to around 10 per cent of household disposable income.

There is also the question of timing. The Governor said "it can take 12, perhaps even 18 months" for the full effect of rate changes to work through the economy, so the impact of this year's increases is still unfolding.

On what happens next, Mr Hauser was candid about the limits of any one official's view. "There's nine people voting on it. So you'd be mad to take my advice," he told 7.30. The Board's own statement says it "will continue to do what it considers necessary to bring inflation sustainably back to target, including increasing the cash rate target further if needed."

The bottom line

Mr Hauser's line about protecting jobs reframes rate rises as a defence of the labour market rather than an attack on it. The RBA's case, pieced together from its public statements, is that acting on inflation now, while unemployment is still low historically and the labour market a little tight, helps stop high inflation becoming embedded. The trade-offs are real, with unemployment forecast to edge higher and borrowers feeling the pinch. Mr Hauser speaks at Citi's Australia & New Zealand Investment Conference on 21 October, ahead of the Board's 3 November decision.