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Not as a universal rule or permanent goal. In its September 29, 2026 decision, the Reserve Bank of Australia (RBA) said inflation was too high and raised its cash-rate target by 25 basis points to 4.60 per cent. The Bank’s August forecast projected unemployment rising gradually to 4.8 per cent by December 2028, but that was a forecast—not a target or a guarantee. Brisbane Times columnist Millie Muroi’s argument is that some temporary rise may accompany efforts to reduce inflation, but persistently higher unemployment should not become an accepted destination.
Why might unemployment rise as inflation comes down?
The RBA uses interest rates to influence demand across the economy. When it raises rates, borrowing becomes more expensive for households and businesses. That can temper spending and investment, easing pressure on the supply of workers and other resources. The policy aim described by Governor Michele Bullock on September 29, 2026, was to return inflation to target; she said inflation remained too high and domestic capacity pressures were contributing to it. RBA September 2026 policy decision.
If employers face less pressure to expand, employment may grow more slowly, and people looking for work may take longer to find it. That is one way tighter monetary policy can coincide with a higher unemployment rate. It does not make a rise inevitable, nor establish that unemployment itself is the Bank’s objective.
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The RBA’s August 2026 Statement on Monetary Policy projected unemployment edging up from 4.4 per cent in June 2026 to 4.8 per cent by December 2028. Its forecast table also showed positive employment growth. These are projections, not later observed outcomes: the path can change as economic conditions and incoming data change. RBA Statement on Monetary Policy, August 2026.
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The forecast describes the Bank’s expected economic path under its outlook; it should not be read as a desired unemployment rate. The RBA’s stated policy objective in the September decision was bringing inflation back to target. The forecast alone does not establish that the Bank intends unemployment to remain at that level after inflationary pressures ease.
Does a higher unemployment rate mean people are losing jobs?
No. The unemployment rate measures unemployed people as a share of the labor force, which includes people who are employed and those without work who are looking for it. The rate can rise when the labor force grows faster than employment, even if the number of people with jobs is increasing.
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At the September 29 media conference, Bullock said: “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 substitute for checking current labor-market data. RBA September 2026 media conference.
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Why does Muroi say “for now”?
In Brisbane Times commentary republished via QOSHE, Millie Muroi accepts that a temporary rise in unemployment may be part of reducing inflationary pressure. Her qualification is that this should not become a long-run destination: she emphasizes the financial and social value of access to work and questions whether unemployment is expected to stay elevated even after external shocks pass. Those are Muroi’s judgments, not official RBA policy. Millie Muroi’s Brisbane Times commentary, via QOSHE.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How should you judge whether the trade-off is working?
There are two outcomes to watch together: whether inflation is moving back toward the RBA’s target, and what is happening to employment. A higher unemployment rate alone does not settle the question. It matters whether employment is still growing, whether more people are entering the labor force, and how difficult it is for job seekers to find work.
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The evidence cited here supports a qualified answer: the RBA’s forecast allowed for unemployment to rise while employment continued to grow, and the Bank’s stated priority was reducing inflation. It does not prove that every rise in unemployment is necessary, that a particular rate is a permanent target, or that the forecast will be realized. The August projection should not be mistaken for the latest actual rate.
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