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In the Reserve Bank of Australia’s current policy outlook, unemployment is forecast to rise as inflation is brought back toward target—but that is a projection, not a goal or guarantee. Brisbane Times columnist Millie Muroi argues that a temporary rise may be part of the trade-off, while warning that persistently higher unemployment should not be treated as an acceptable destination.
Why might unemployment rise as inflation falls?
When demand and domestic capacity pressures keep inflation high, the RBA can raise interest rates to slow spending and ease pressure on prices. Slower demand can also mean employers add jobs more slowly, and job seekers may take longer to find work. That is the connection behind the difficult policy trade-off: reducing inflation can weaken labor-market conditions.
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At its September 29, 2026 decision, the RBA raised the cash-rate target by 25 basis points to 4.60 per cent. Governor Michele Bullock said higher rates were needed to return inflation to target, describing inflation as too high and domestic capacity pressures as a driver. RBA, September 2026 decision and statement.
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That explains the policy rationale; it does not mean the RBA has announced a desired unemployment rate. Muroi’s commentary, published by Brisbane Times and accessed via QOSHE, accepts that a temporary increase may help reduce inflationary pressure but questions whether elevated unemployment is expected to persist after external shocks pass. Her view is commentary, not official RBA policy. Millie Muroi, Brisbane Times commentary via QOSHE.
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What unemployment rate is the RBA forecasting?
The RBA’s August 2026 Statement on Monetary Policy projected unemployment rising gradually from 4.4 per cent in June 2026 to 4.8 per cent by December 2028. The same forecast table showed positive employment growth. These are projections, not observed future results, a guarantee, or a target the Bank has set for unemployment. RBA, Statement on Monetary Policy, August 2026.
The distinction matters: the RBA’s stated objective is to return inflation to target, while its published unemployment path describes an expected outcome under the assumptions behind that forecast. Forecasts can change as economic conditions and data change.
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Does a rising unemployment rate mean people are losing jobs?
No. The unemployment rate can rise even while employment grows, if the labor force grows faster than the number of jobs. People entering or returning to the labor force may be looking for work; they count as unemployed while searching, even if the economy is still adding jobs.
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Repair Windows errors before they cause bigger problemsFix Now →Scan for outdated or missing drivers - takes under a minuteDriver Scan →Clear out junk files and repair common Windows errorsFree Scan →At the September 29 media conference, Bullock cautioned: “a rise in the unemployment rate does not necessarily mean job losses.” She said the rate had risen from 3.5 per cent to 4.6 per cent over the preceding couple of years while more than one million jobs had been created. Those figures describe her remarks at that conference, not a current labor-force release. RBA, Governor’s media conference transcript, September 29, 2026.
To understand what a rising rate means in practice, look beyond the headline percentage. Employment growth, labor-force participation, and how long job seekers take to find work help distinguish widespread layoffs from a labor force growing faster than employment.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Is higher unemployment an acceptable long-term price?
Muroi argues that a temporary rise in unemployment may be part of the effort to control inflation, but says an unemployment rate above 4.5 per cent should not become an accepted long-run destination. Her concern is that access to work has financial and social value, and that a policy discussion focused only on inflation risks overlooking the costs borne by job seekers. This is her assessment of the trade-off, not a confirmed RBA threshold or target.
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The relevant test is therefore two-sided: whether inflation is moving back toward the RBA’s target, and what is happening to employment and people seeking work. The August forecast alone cannot settle that judgment, especially because it is a projection rather than an outcome.
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