Key Highlights

Hunter said there is no painless tool, but higher interest rates will bring inflation down and that is why the Bank uses them.

She named two challenges: an overseas oil shock and excess domestic demand relative to what the economy can sustainably supply.

She declined to signal the Board's 3 November decision, due at 2.30 pm (AEDT).

In a prime-time television interview, the RBA's Assistant Governor (Economic) made the case that rate rises hurt, but hurt less than letting inflation run.

Central bankers usually explain themselves through formal statements, parliamentary hearings and conference speeches. On Sunday 25 October 2026, Australians watching 60 Minutes heard the case for higher interest rates made in a different setting, as Sarah Hunter, Assistant Governor (Economic) at the Reserve Bank of Australia (RBA), was questioned by interviewer Adam Hegarty in a segment recorded on 21 October.

Her central argument came down to a single sentence: "there's no painless tool, but this tool does work, and that's why we use it."

What follows examines that defence, the trade-off it rests on, and how it fits with what other RBA officials have said.

The problem the tool is meant to solve

Hunter described two challenges facing the economy. The first is an overseas oil shock. The second is excess domestic demand relative to what the economy can sustainably supply.

The scale of the first is visible in the latest Australian Bureau of Statistics (ABS) data, released on 28 October, after the interview had aired. Automotive fuel prices rose 23.6 per cent over the 12 months to September, driven by higher world oil prices. Headline inflation reached 4.3 per cent and the trimmed mean, a measure of underlying inflation, was 3.6 per cent, both above the Bank's 2–3 per cent target.

The second challenge echoes the Bank's broader diagnosis. Governor Michele Bullock told senators on 28 October that "we still see inflation arising from domestic capacity pressures", and that low productivity growth means the economy cannot grow rapidly without adding to inflation pressure.

The core of the defence

Hunter's argument had three parts.

It works. "We know that higher interest rates will bring inflation down," she said. Higher borrowing costs restrain spending, easing the pressure of demand on the economy's capacity.

It is not free. She did not pretend otherwise. "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."

The alternative is worse. Leaving inflation high carries its own costs. "We don't want to live with high inflation for a long time," she said.

The comparison she drew was with approaches tried in earlier decades, including price controls in the 1970s, a wage freeze in the early 1980s, and targeting of credit and money. Her verdict on that history was succinct: "What we learned through that sort of journey, none of those were particularly effective."

The Bank has used the cash rate repeatedly this year. As Hunter put it: "the Board have put through four rate hikes this year". The cash rate target now stands at 4.60 per cent, after a cumulative increase of 100 basis points in 2026.

Who bears the cost

The phrase "no painless tool" is an implicit recognition that someone pays. The RBA has not shied away from naming who.

Governor Bullock said at her 29 September media conference: "Those who have mortgages, yes, this clearly impacts them and it hurts them." On the other side, she has argued that inflation itself imposes costs widely: "high inflation hurts all Australians, especially the most vulnerable." And: "Pay packets don't go as far as they used to, and that's why we need to stop this high inflation."

Hunter addressed borrowers directly in the interview, saying most entered this period with buffers such as offset savings, and that the RBA is not seeing systemic mortgage stress. "We're not trying to put people out of their homes," she said.

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

Beyond the headline line

A prime-time platform did not mean a preview of policy. Hunter declined to signal the outcome of the Monetary Policy Board's 3 November decision. She did warn that oil-driven price pressure is still coming through, and that things will get "a little bit" worse before they improve.

She also drew a line around the RBA's role on public spending. Government spending is part of demand and is included in the Bank's forecasts, but as an independent, unelected body, she said, the RBA should not advise governments on how much to spend.

On housing, she said higher rates are slowing the market as intended, with tax changes from the May budget also having an effect.

Perhaps the most human moment came when she reflected on inflation's place in public life: "I'd actually love it if the country could forget about it." The remark captures the endpoint the Bank says it is working towards, an economy where inflation is low and stable enough that households no longer need to think about it.

That human dimension is one the RBA has emphasised more broadly. In her 23 October graduation address at the University of New England, Governor Bullock said "the work of the RBA is about people", and described a visit to a national debt helpline: "It provided a very human perspective on the economy that you don't get from looking at aggregate data."

A television interview reaches a different audience from a policy statement. Explaining why the Bank uses interest rates, and acknowledging their cost, is part of making a contested policy understandable, particularly at a time of rising repayments.

The bottom line

Sarah Hunter's defence of interest rates rested on a straightforward trade-off: the tool imposes real costs, but in the RBA's assessment those costs are smaller than those of the alternatives, or of allowing high inflation to persist. She paired that argument with reassurance that the Bank is not seeing systemic mortgage stress or signs of recession, while declining to say what the Board will do next.

The Board's decision, and its new forecasts, are due at 2.30 pm (AEDT) on 3 November. It is worth reading them with Hunter's framing in mind: whatever the outcome, the Bank has said plainly that there is no painless option.