In the Reserve Bank of Australia’s current outlook, unemployment is projected to rise gradually as inflation is brought back toward target—but that is a forecast, not a promise or a permanent policy goal. The Bank’s August 2026 forecast put unemployment at 4.8 per cent by December 2028, up from 4.4 per cent in June 2026. Brisbane Times commentator Millie Muroi argues that some increase may be a temporary cost of reducing inflation, but warns against treating persistently higher unemployment as an acceptable destination.
Why might unemployment rise while the RBA fights inflation?
The RBA’s stated immediate objective is to return inflation to target. On September 29, 2026, it raised the cash-rate target by 25 basis points to 4.60 per cent. Governor Michele Bullock said higher rates were needed because inflation remained too high and domestic capacity pressures were contributing to it. Higher interest rates can restrain demand; if businesses consequently need fewer additional workers, employment may grow more slowly and it may take longer for job seekers to find work.
That makes a rise in unemployment a possible consequence of disinflation, not an objective that should be pursued for its own sake. Muroi’s October 2, 2026 Brisbane Times commentary, republished via QOSHE, accepts that a temporary increase may help ease inflationary pressure while questioning whether elevated unemployment is expected to persist after external shocks pass. Those are her judgments, not a formal RBA commitment about an unemployment target. Read Muroi’s Brisbane Times commentary via QOSHE.
What does the RBA actually forecast?
The RBA’s August 2026 Statement on Monetary Policy projected a gradual increase in unemployment. The figures below are forecasts for the specified dates, not observed outcomes or a guarantee of what will happen:
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| Period | Unemployment rate | How to read it |
|---|---|---|
| June 2026 | 4.4 per cent | Starting point in the RBA’s forecast |
| December 2028 | 4.8 per cent | Projected rate, not an RBA target |
The forecast table also showed positive employment growth. That matters: a rising unemployment rate can coexist with more people in work when the labour force expands faster than employment. The RBA’s projections can change as new data and economic conditions emerge. See the RBA’s August 2026 Statement on Monetary Policy.
Does higher unemployment mean people are losing jobs?
No—not by itself. The unemployment rate measures the share of people in the labour force who are unemployed and seeking work. It can rise because employment falls, but it can also rise when more people enter or remain in the labour force looking for jobs and employment does not grow quickly enough to absorb them.
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At the September 29, 2026 media conference, Bullock put it plainly: “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 the period she discussed; they do not mean every worker was secure or that job losses did not occur. The distinction is between the net number of jobs and how quickly employment is growing relative to the number of people seeking work. Read Bullock’s September 29, 2026 RBA media-conference remarks.
How should households interpret the trade-off?
A headline unemployment rate cannot show the whole experience of the labour market. To understand whether conditions are worsening, consider both whether people are finding and keeping jobs and whether the number of job seekers is growing faster than available work. The RBA forecast of positive employment growth alongside a higher unemployment rate illustrates why those measures can point in different directions.
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For households, the policy trade-off is real. Higher rates can make borrowing more expensive and weigh on spending, while a weaker hiring environment can make finding work harder or lengthen a job search. Muroi emphasizes that access to employment has financial and social value; her concern is that a temporary increase could become normalized even after the pressures behind inflation have eased. The forecast alone does not establish that this will happen.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What would show whether the policy is working?
Judge the outcome on two axes rather than treating a single unemployment figure as the verdict:
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- Inflation: Is inflation moving back toward the RBA’s target? That is the stated purpose of the September 2026 rate increase.
- Employment: Is employment still growing, and are job seekers taking longer to find work? A higher unemployment rate alongside job growth has a different meaning from a rate rising because employment is contracting.
The September decision, August projections and Bullock’s explanation describe the RBA’s position at those dates. They do not provide a current realized unemployment rate or guarantee how the economy will evolve.
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