Two days after the Reserve Bank lifted the cash rate to 4.85%, Deputy Governor Andrew Hauser used a major speech to confront a problem central banks rarely discuss openly: whether the public still believes they can do the job.

Why trust matters

Delivering the 24th Sir Leslie Melville Lecture at the Australian National University in Canberra on Thursday 5 November, Mr Hauser argued that trust is not just a matter of legitimacy, but part of how monetary policy works. If households and businesses believe the RBA will return inflation to target, he said, they adjust prices, wages and spending sooner, so interest rates do not need to rise as far.

“This is a powerful result – because it means that if the public understands and trusts the central bank’s strategy, the policy response required to deliver a given disinflation can be smaller and less costly in terms of lost output,” he said.

He said that after persistent above-target inflation and a run of global shocks, “Just as we need it most, trust is under strain.”

What the RBA’s survey shows

The RBA’s Community Research Survey has drawn on feedback from 12,000 Australians across four waves since February 2025, the latest in September. Around 55% of respondents report “high” or “moderately high” trust in the RBA, a level Mr Hauser said had been broadly stable, or even slightly up, over the past 18 months.

But trust in the bank’s near-term ability to achieve its objectives has fallen materially. “Australians understand our inflation mandate and hold us accountable when we fail to meet it. Trust does not mean unconditional approval,” he said. The speech also noted that Australians with a mortgage currently have considerably lower trust in the RBA than those without one.

Among businesses, the picture is less reassuring. Firms responding to the Macquarie University Business Outlook Scenarios Survey have become less sure that the inflation target will be achieved over the next five to 10 years, and some contacts in the RBA’s liaison program say similar things.

No room for complacency

Mr Hauser warned that the stable headline score may reflect reserves of goodwill built up in earlier years. “A reserve of trust is not a licence to disappoint. It makes the continuing work of earning trust more pressing, not less,” he said.

He said the RBA was investing in new models, data and research, testing alternative scenarios alongside its central forecast, and working on clearer explanations for households and businesses. He also stressed that explaining how the bank would respond to events is not the same as promising a path for interest rates: “We need people to understand the strategy, not mistake it for a guarantee.”

The context

The RBA’s November Statement on Monetary Policy, released on 3 November, forecasts headline and underlying inflation to remain above 3% until the end of 2027, and to reach the midpoint of the 2–3% target range in mid-2028. For borrowers, Mr Hauser’s message is that the bank sees credibility on inflation as worth protecting, even as the economy slows.

Sources: RBA, Andrew Hauser, “Trust, Expectations and Monetary Policy”, Sir Leslie Melville Lecture, ANU (5 November 2026); RBA Statement on Monetary Policy, November 2026 (3 November 2026).