Overview
- The Reserve Bank's new report says higher trust in the RBA causes households to expect lower future inflation.
- Household expectations matter because they shape wage demands and pricing decisions that can feed into actual inflation.
- The report warns that if expectations become unanchored, the Bank may need bigger rate rises to get inflation down.
- The RBA has already raised interest rates three times in 2026 as inflation has surged, and public belief the Bank will meet its goals has fallen sharply in recent months.
- Trust is higher among people who know the RBA's objectives, follow economic news, and have stronger economic literacy, so the Bank says clearer communication and education can help keep expectations anchored and reduce the economic cost of fighting inflation.