Mayank Bansal, CFA
Mayank Bansal is a CFA Charterholder and heads the Equity Research team at Kapitales Research, with over 5 years of experience analysing global equity markets. He leads fundamental, data-driven research combining rigorous financial analysis with macro trends.
Can the RBA Justify Further Rate Hikes Amid Mounting Losses and Rising Unemployment?
Highlights:
RBA Faces Financial Losses and Growing Economic Pressure
The Reserve Bank of Australia (RBA) faced renewed scrutiny on 15 October 2026 following reports of an AU$8.5 billion accounting loss for FY2026, alongside concerns surrounding Governor Michele Bullock's remuneration. The developments emerged as Australia's labour market showed signs of weakening, complicating the central bank's efforts to contain inflation without placing excessive pressure on households and businesses.
The reported loss reflects valuation pressures associated with rising bond yields and Australian dollar movements. However, central bank accounting losses do not necessarily undermine its ability to implement monetary policy.
Financial Performance and Governor's Remuneration Under Scrutiny
The RBA's latest financial results highlight the challenges associated with managing its balance sheet during changing interest rate conditions.
Key developments include:
These developments place additional attention on the RBA's financial management, although executive remuneration and accounting outcomes remain separate from its statutory monetary policy objectives.
Australian Unemployment Reaches Five-Year High
Australia's September employment figures intensified uncertainty surrounding the RBA's next policy decision. Employment declined by 39,300 positions, while the unemployment rate stood at 4.7%, its highest level in nearly five years.
Part-time employment fell by 73,700 positions, partly offset by 34,400 additional full-time jobs. The August unemployment rate was also revised upward to 4.7%, meaning September's reading was unchanged on a revised basis.
Interest Rate Expectations Shift as Inflation Risks Persist
The weaker labour market prompted investors to reduce expectations of another interest rate increase.
Following September's 25-basis-point increase, the RBA's cash rate stands at 4.60%. Market expectations for a November rate hike subsequently declined to approximately 10–15%, reflecting concerns about slowing economic activity.
Nevertheless, persistent inflation remains a significant challenge, leaving policymakers cautious about declaring the tightening cycle complete.
Outlook: Inflation Data Could Determine the RBA's Next Move
Attention now turns to Australia's September-quarter inflation figures, scheduled for 28 October 2026.
A moderation in inflation could strengthen expectations of a November policy pause, potentially easing pressure on mortgage holders and businesses. Conversely, persistent price pressures could justify further tightening despite deteriorating employment conditions.
The RBA's next decision will therefore depend on balancing inflation control against growing risks to economic growth and employment.
Note- All data presented is based on information available at the time of writing.
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