Inflation has peaked – but will the RBA stop raising rates and focus on locking in low unemployment?

Inflation has fallen from 7.8% to 6%, below the Reserve Bank’s target rate, despite unemployment figures remaining at a steady 3.5%. Photograph: Jessica Hromas/The Guardian

The latest inflation figures released on Wednesday were unambiguously good news. The 6.0% annual inflation is comfortably below the Reserve Bank’s estimate of 6.3%. Hopefully it will see the Reserve Bank hold off on raising rates further and instead shift its focus to preventing unemployment from rising.

There is now no longer any doubt inflation peaked last year. This was actually pretty clear at the time, but the drop over the past six months from an annual inflation of 7.8% to 6.0% is the fastest half-year fall since 2009 (excluding the pandemic lockdown period).