RBA Deputy Governor Andrew Hauser warned that public confidence in the central bank’s ability to bring inflation under control has weakened materially, even as overall institutional trust remains broadly stable. Speaking at the Sir Leslie Melville Lecture at the Australian National University on Thursday, November 5, Hauser cited findings from the RBA’s Community Research Survey, which has gathered responses from approximately 12,000 Australians across four waves since February 2025. Around 55% of respondents reported high or moderately high trust in the RBA, a measure that had remained stable or improved slightly over the past 18 months. However, confidence in the Bank’s ability to meet its monetary policy objectives over the preceding and coming 12 months had “fallen materially.” Hauser observed that “Australians understand our inflation mandate and hold us accountable when we fail to meet it,” highlighting the growing distinction between trust in the institution and confidence in its performance.
Hauser attributed part of this deterioration to the cumulative impact of inflation on household living standards. While annual inflation rates may moderate, households continue facing substantially higher prices than before the pandemic. “A lower inflation rate doesn’t undo that accumulated increase,” he said, arguing that the lasting increase in the price level helps explain public dissatisfaction even when inflation begins to slow. He noted that consumer confidence remained exceptionally weak, with households identifying inflation as their leading economic concern. The findings suggest that progress toward the inflation target may not immediately restore public confidence, as households assess monetary policy partly through the accumulated cost-of-living pressures they continue experiencing.
Concerns are also emerging over longer-term inflation expectations among businesses. Hauser cited Macquarie University’s Business Outlook Scenario Survey, which indicated that more firms were becoming uncertain about whether the RBA’s inflation target would be achieved over the next five to ten years. Similar concerns had emerged through the Bank’s business liaison program. However, he acknowledged that Australia lacked a reliable measure of households’ longer-term inflation expectations, limiting conclusions about whether the same deterioration was occurring among consumers. The distinction matters because confidence in the central bank’s ability to restore price stability can influence future pricing and wage-setting behaviour. Growing uncertainty about achieving the target therefore presents a potential challenge to keeping inflation expectations anchored, although the available evidence does not establish that longer-term expectations have already become unanchored.
The speech followed Tuesday’s decision to raise the cash rate from 4.60% to 4.85%, its highest level in 18 years, as RBA responded to a worsening inflation outlook. Hauser did not provide a fresh signal about the timing of another increase, instead emphasizing the importance of preserving monetary-policy credibility amid persistent inflation and increasingly unpredictable global shocks. He warned that geopolitical tensions, tariffs and technological change were making economic forecasts less reliable and policy trade-offs more difficult. Reflecting on the challenge facing central banks, Hauser concluded: “Just as we need it most, trust is under strain.” His remarks underscore that RBA must not only return inflation sustainably to its 2–3% target range, but also maintain public confidence in its ability to deliver that outcome.
Key Takeaways
- Confidence in RBA’s inflation control is weakening: Deputy Governor Andrew Hauser warned that public trust in the Bank’s ability to meet its monetary policy objectives over the preceding and coming 12 months had “fallen materially,” despite broadly stable confidence in the institution itself.
- Overall institutional trust remains relatively resilient: The RBA’s Community Research Survey, covering approximately 12,000 Australians across four waves, found that around 55% reported high or moderately high trust in the central bank. Overall trust had remained stable or improved slightly over the previous 18 months.
- Accumulated price increases are undermining public confidence: Hauser emphasized that lower annual inflation does not reverse the substantial rise in prices since COVID. Persistent cost-of-living pressures help explain why households remain dissatisfied even when inflation begins to moderate.
- Businesses are increasingly uncertain about longer-term inflation control: Macquarie University’s Business Outlook Scenario Survey indicated growing uncertainty among firms over whether RBA’s inflation target would be achieved within five to ten years. Similar concerns emerged through the Bank’s business liaison program.
- Evidence on household inflation expectations remains incomplete: Hauser acknowledged that Australia lacks a reliable measure of households’ longer-term inflation expectations. The available findings therefore do not establish that inflation expectations have become unanchored.
- Credibility matters for future inflation outcomes: If businesses and households become less confident that inflation will return sustainably to target, their wage-setting and pricing decisions could become harder for RBA to influence, potentially complicating monetary policy.
- The warning follows an 18-year high in interest rates: RBA raised its cash rate from 4.60% to 4.85% on November 3. Hauser did not signal another imminent increase, instead emphasizing the importance of maintaining public trust amid persistent inflation and global economic uncertainty.
- RBA faces two interconnected challenges: The Bank must bring inflation sustainably back within its 2–3% target range while preserving public confidence that it can deliver that outcome.
