RBA Warns of Stronger Inflation and Slower Productivity Growth

In a speech, RBA Assistant Governor Sarah Hunter stated that inflation in Australia was stronger than anticipated in Q3 2025, while weak productivity has reduced the economy's potential growth rate. Despite recent data showing slight improvement overall, employment remains somewhat weak. Due to recovering consumer demand and persistent inflation in certain sectors, the RBA board decided to maintain rates at 3.65% in September. Hunter mentioned that they will continue to monitor outcomes and reassess their economic outlook, adjusting policy as necessary based on new information. She also highlighted a long-term productivity slowdown, attributed to decreased competition and slower technology adoption, which has lowered the economy's growth potential to around 2% and indicates a slower pace for wage growth to align with the RBA's 2.5% inflation target.