As people lose faith in institutions across the globe, a report shows maintaining trust in the Reserve Bank can help keep inflation under control.
A survey released by the central bank on Wednesday showed people who have higher trust in the RBA are more likely to have lower expectations of inflation.
That has direct implications for how high the RBA needs to set interest rates to keep inflation under control.
The report comes as the RBA has hiked interest rates three times in 2026, citing inflation pressures stoked by war in the Middle East, which some property analysts have blamed for contributing to a recent decline in housing prices.
Written by Reserve Bank staff Jack Harden, Peter Rickards and Michelle Wright, the report observed that the survey showed that respondents with higher trust in the RBA reported lower inflation expectations on average.
Inflation expectations are closely watched by the central bank.
If expectations become “unanchored”, it becomes more difficult for the RBA to get inflation under control.
“This is because the expectations households and firms have about future price increases influence the economic decisions they make and can, in turn, affect actual inflation outcomes,” the report said.
If inflation expectations remain anchored, it means the Reserve Bank can sustain a lower unemployment rate without putting upwards pressure on inflation.
“This, in turn, means that interest rates might not need to increase by as much in order to counter an inflationary shock, compared with a situation where inflation expectations start to rise,” the report said.
The study found that there was a causal link between higher trust and lower inflation expectations, which was consistent with evidence from other central banks.
People tended to have higher trust if they had greater knowledge of the RBA’s objectives, higher economic literacy and stronger engagement with economic news.
Older Australians tended to have higher trust than younger Australians, and men tended to have greater trust than women.
The survey also found that inflation remained Australians’ top economic concern.
While trust in the RBA has remained relatively stable over the year since the first survey was conducted, belief that the RBA has achieved or will achieve its monetary policy objectives has collapsed in the past six months.
It corresponds with a major break-out in inflation since the start of 2026.
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