RBA's Kent Questions Policy Restrictiveness as Rising Neutral Rate Keeps Hikes on Table

Reserve Bank of Australia Assistant Governor Christopher Kent questioned whether the current 4.60% cash rate is sufficiently restrictive, citing evidence of rising neutral interest rates domestically and globally. Despite four rate increases in 2026, a higher neutral rate suggests policy exerts less downward pressure on inflation than anticipated. Meanwhile, conflicting economic signals have emerged as September employment dropped by 39,000, lifting unemployment to a five-year high of 4.7%, while underlying inflation remains sticky at 3.6%. Markets price an approximate 30% chance of a November rate hike ahead of crucial third-quarter CPI data due on 28 October.