FX.co ★ RBA Warns of Stronger Inflation and Slower Productivity Growth

In a recent speech, RBA Assistant Governor Sarah Hunter highlighted stronger-than-anticipated inflation levels in Australia for the third quarter of 2025. She emphasized that decreased productivity is contributing to a reduced potential growth rate for the economy. While recent economic data has shown slight improvements overall, employment figures have weakened. With consumer demand on the rise and persistent inflation in certain sectors, the Reserve Bank of Australia opted to maintain the interest rate at 3.65% as of September. Hunter stated, "Looking forward, we will monitor outcomes and continually reassess our view on the outlook for the economy, and the board will adjust policy as appropriate as new information comes to hand." She also referenced a sustained productivity slowdown attributed to diminished competition and a lag in technology adoption, which has effectively lowered the economy's growth capacity to about 2%. This scenario implies a more measured pace of wage growth necessary to align with the RBA's target inflation rate of 2.5%.