Key Highlights

•  Sarah Hunter said rates have not done enough yet and that higher rates work but take time, with the Board meeting on 2 and 3 November 2026.

•  She described an external oil shock spreading into items such as renovation costs, and an economy with a bit too much demand relative to what it can sustainably supply.

•  She said most borrowers have buffers and offset savings and the RBA is not seeing mass defaults, but she gave no signal about the November decision.

A senior Reserve Bank of Australia official says higher interest rates have not yet finished their work, which matters because the Monetary Policy Board meets on 2 and 3 November. Sarah Hunter, the RBA's Assistant Governor (Economic), made the remarks in an interview on 60 Minutes, broadcast on 25 October 2026 and pre-recorded on 21 October. They are one official's views, not a Board decision.

For context, the Board raised the cash rate target to 4.60 per cent at its 29 September 2026 meeting, according to the RBA's media release. That is the rate the Board sets for overnight money-market lending, and it influences, but does not dictate, what banks charge borrowers.

What Hunter said about inflation

Hunter described an external oil shock whose price pressure is now spreading into items such as renovation costs. She said the economy has "a bit too much demand, relative to what we can sustainably supply", and that the RBA must stop inflation becoming embedded. Asked whether rates had done enough, she said "not quite yet", adding that higher rates work but take time.

Mortgage stress

Pressed on households under strain, Hunter said most borrowers have buffers and offset savings, and that the RBA is not seeing mass defaults. She acknowledged individual hardship and said the stories weigh on her mind and on the Board's. She also said the RBA is "not seeing really bad outcomes yet" from financial stress.

Rates as a blunt tool

Asked whether interest rates are the only tool, she said price controls, a 1980s wage freeze and credit or money supply targeting had been tried and none was particularly effective. "There's no painless tool, but this tool does work," she said. She described the housing slowdown as one intended channel through which higher rates cool demand.

Government spending and recession risk

On fiscal policy, Hunter said government spending is part of demand and is considered in the RBA's forecasts, but the RBA is independent and does not comment on how governments spend. On recession risk, she said "it's not a recession yet" according to the RBA's liaison contacts, and that a sharp downturn is not what the RBA is trying to achieve. She declined to pre-empt future Board decisions.

Uncertainties and limits

This is a broadcast conversation, not a forecast. It contains no new RBA figures, and its statements about oil prices, demand and housing are Hunter's characterisations rather than published data. The RBA's formal assessment will appear in the Statement on Monetary Policy. How long the oil shock lasts is, by her own account, something she could not predict.

What to watch next

The Monetary Policy Decision Statement and Statement on Monetary Policy are due at 2.30 pm AEDT on 3 November 2026, with a media conference at 3.30 pm. The RBA's Senate Economics Legislation Committee appearance is scheduled for 11.15 am AEDT on 28 October, and the RBA's calendar also lists a CPI update on the same day.