Rising unemployment creates headaches for the RBA in Australia

Unemployment jumped to an almost four-year high in September. The number of unemployed surged by 33,900 across the month, dwarfing the 14,900 rise in jobs. That combination pushed the unemployment rate to 4.5%, up from 4.3% in August.

The RBA faces a tricky balancing act: inflation is running hotter than the board’s latest forecasts, while the labour market is softer. We see the recent inflation uptick as temporary and expect underlying pressures to ease. With joblessness rising, we continue to forecast a rate cut in November, followed by one final move in early 2026.