RBA Governor Bullock: Australia Near Full Employment as Inflation Returns to Target

Sydney, September 22, 2025 — Reserve Bank of Australia (RBA) Governor Michele Bullock said the nation’s labor market is “close to full employment,” with the unemployment rate hovering around 4.2%, a historically low level.

Bullock noted that while some tightness remains in the labor market — with businesses still struggling to find suitable workers — there are no signs of a sharp deterioration in employment conditions.

On inflation, she emphasized that underlying price pressures have eased significantly, with trimmed mean inflation falling back within the RBA’s 2–3% target band. Headline inflation is also moving closer to target after a series of rate cuts earlier this year, which brought the cash rate down to 3.6%.

However, Bullock warned of external risks, including China’s slowing economy, global trade uncertainties, and volatility in commodity prices, which could weigh on Australia’s growth outlook.

The RBA’s latest stance signals a cautious but optimistic outlook for Australia’s economy:

• Monetary Policy: With inflation easing and employment strong, the RBA has room to gradually reduce interest rates, though further moves will be measured to avoid reigniting wage or price pressures.
• Labor Market: Near full employment boosts household consumption and confidence but could lead to higher wage growth, raising costs for businesses.
• Investor Implications: A resilient economy and stable inflation trajectory may strengthen investor confidence in Australia’s equity and bond markets, while the Australian dollar (AUD) could face swings depending on the pace of RBA’s easing versus global peers.
• Global Links: As a resource-driven economy, Australia’s outlook remains tied to China’s demand and global commodity cycles, meaning external shocks could quickly alter the RBA’s policy path.