Reserve Bank of Australia signals extended inflation battle

• The Reserve Bank of Australia warned that returning inflation to its target range will take several years.
• The central bank flagged potential interest rate increases if current policies fail to curb rising living costs.
• Officials are prioritising job preservation while attempting to guide inflation back to the 2–3% target by late 2026.

The Reserve Bank of Australia has warned that fully resolving the post-pandemic inflation surge will take several years despite broader economic strength.

This extended timeline contrasts with other global central banks, which have lowered inflation faster by raising interest rates more aggressively.

"People are furious about inflation," said Reserve Bank of Australia Deputy Governor Andrew Hauser.

The central bank cited Middle East conflicts, artificial intelligence spending, and weak supply potential as ongoing pressures keeping living costs high.

The central bank stated it will raise interest rates further if its current approach fails to bring inflation back to its 2%–3% target by the end of next year.

The central bank previously held the cash rate steady to protect employment gains made during the economic recovery from the pandemic.

Recent policy decisions reflect an effort to balance price stability against the risk of rising unemployment across the domestic economy.