Reserve Bank of Australia Deputy Governor Andrew Hauser said he was surprised that public trust in the central bank remains solid after it sharply raised interest rates to curb stubbornly high inflation.
Speaking in a address in Canberra on Thursday, Hauser said: "Over the past 18 months, our overall trust indicators have been broadly stable, and even rose slightly. During a period of rising rates and inflation well above the target range, this result is encouraging, but frankly also quite surprising." He was referring to the RBA's 2% to 3% inflation target range.
The RBA raised rates for the fifth time in 2026 this week, lifting the cash rate to a 18-year high of 4.85%. That could squeeze mortgage holders, who are already dealing with higher fuel prices, cost-of-living pressures, rising unemployment and a softening housing market, all of which are pushing consumer confidence into deeply pessimistic territory.
The RBA raised rates to the highest level since 2008. Hauser said the RBA has collected feedback from 12,000 Australians through surveys since early last year. He acknowledged that the positive result could also reflect trust the central bank built up in earlier periods.
The central bank's number two official warned: "These trust reserves may protect trust from poor economic outcomes for a while, but they can be depleted." The RBA began raising rates in February this year to guard against inflation, which had already begun accelerating even before the US-Iran war triggered a global oil price shock. Since late 2021, the bank has been unable to hit the midpoint of its 2.5% inflation target.
Hauser said: "As expected, people's trust in our ability to meet the target in the near term, whether looking back a year or forward a year, has fallen sharply." The RBA operates under a dual mandate aimed at achieving price stability and full employment. Hauser's remarks came as RBA officials worry about the growing risk that rising inflation expectations could become entrenched. Last month, he noted that a growing number of businesses see 3% to 3.5% inflation as the "new normal."
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