The RBA raised rates at its first three meetings of the year to 4.35% to tackle renewed inflation pressures
Published Wed, Jul 22, 2026 · 12:27 PM
AUSTRALIA’S central bank said results from a new survey showed inflation was the top economic concern for respondents, adding “fundamental gaps” remain in the public’s understanding of how monetary policy works.
The Reserve Bank has conducted three surveys since early last year, hearing from 9,000 Australians as part of its response to an independent review that emphasised the need for greater transparency.
The RBA will utilise the findings to aid its communication and engagement with the public, according to a research note released on Wednesday (Jul 22).
“Public trust in the RBA is comparable with other Australian and international institutions and has been stable since early 2025,” the results showed, though this varied across the community. “Higher trust is associated with lower inflation expectations, highlighting that trust is important in its own right, and also for the transmission of monetary policy.”
The RBA has sought to increase transparency in recent years, with Governor Michele Bullock holding a press conference after each meeting, senior officials conducting interviews and members of the rate-setting board undertaking public appearances.
Prior to the review released in 2023, it had been criticised, like many central banks across the world, for being insular and opaque.
The research note pointed out that the latest survey was conducted in February 2026, around the time the Middle East conflict erupted but before fuel prices soared and two further interest-rate hikes were delivered. As a result, it’s likely some results will have changed, it said.
The RBA raised rates at its first three meetings of the year to 4.35 per cent to tackle renewed inflation pressures, before pausing last month.
“Around two-thirds of survey respondents cited inflation as one of their top three economic concerns, and inflation was identified as the most prominent concern across all key demographic groups,” the research note showed. “Concern about inflation is pronounced in particular among lower income households, who tend to be more vulnerable to changes in the cost of living.”
The survey “identified a large gap” in Australians’ understanding of how rates impact inflation. Only 25 per cent responded correctly that higher rates ultimately lead to lower inflation, while more than half indicated that higher rates lead to higher inflation.
It pointed to experimental evidence from the US showing that a large share of people think about the relationship between interest rates and inflation using ‘cost-push’ type logic. By this, higher rates lift the cost of doing business and, in turn, mean firms must increase their prices to cover these costs.
“There were some other misperceptions that were particularly prevalent among younger people, who were more likely than older people to incorrectly think that the RBA is responsible for setting tax rates, regulating the housing market or providing banking services to households,” according to the RBA survey.
Most respondents reported moderate-to-high levels of trust in the RBA, with a median score of six out of 10 in all three survey waves and around three-quarters of respondents reporting scores of five or more, it said.
The RBA said one reason trust is critical for central banks is that it can influence inflation expectations, and hence the transmission of monetary policy. This is because expectations about future price increases influence economic decisions and can in turn, affect actual inflation outcomes.
“Respondents with higher trust in the RBA reported lower inflation expectations on average, and this pattern is consistent across survey waves,” the report showed said. “Trust was somewhat higher among males and older Australians than women and younger people.” REUTERS
