RBA Sees Unemployment Rise to Near 6% in a ‘Trade War’ Scenario

Australia’s central bank warned that the unemployment rate would climb to nearly 6% in a “trade war” scenario where the US re-imposes higher ‘Liberation Day’ tariffs in 2026 and all countries retaliate.

Inflation is forecast to decline to be around 2% at the end of 2026 compared with its baseline forecast of 2.6%, the Reserve Bank said in its quarterly Statement on Monetary Policy released in Sydney on Tuesday. Economic growth also takes a hit — the level of gross domestic product is estimated to be more than 3% lower by mid-2027 compared with its baseline scenario which sees GDP growth picking up over 2025 and 2026.