From Risk to Reality: Australian Forward View

17 September 2026  
Economy and Markets

• Our forecasts for growth are largely unchanged following the release of the Q2 national accounts, and we still expect a gradual rise in the unemployment rate.
• We now expect Q2 trimmed mean CPI to print at 1.0% qoq amid ongoing cost pressures.
• For the RBA, the upside risks to inflation have crystalised and we see them lifting rates at the September meeting, with the risk of a follow up in November. 

The data flow over the past month confirmed that growth has slowed. The national accounts show GDP growth eased from an annualised pace of around 2.9% over H2 2025 to around 1.4% in H1 2026. The decline in business conditions in the NAB Business Survey suggests that growth may have slowed further in Q3. That said, labour market indicators and outcomes have remained resilient.

However, the CPI data point to a stronger than expected outcome for the Q3 trimmed mean (released in late October). Price pressures also remain evident on the input cost side in the business survey and additionally, the rise in oil prices presents a material risk for ongoing cost pass-through.

For the RBA, the extent of inflation pressures mean they will need to recalibrate policy higher, though tighter financial conditions and some signs of slower growth will mean a cautious approach is maintained. We expect a hike in September. A November follow up is a possibility, depending on the activity data over the next two months.

We continue to see below trend growth over 2026 (1.4%) and 2027 (1.6%) before some improvement over 2028 (1.8%). A multi-year period of below trend growth sees an ongoing gradual rise in the unemployment rate – which is now expected to reach around 5% in 2028 before stabilising. On inflation, we still expect a peak this year, and for a gradual cooling in quarterly terms through 2027. This would see underlying inflation reach annualising near the middle of the target band by late 2027.

Uncertainty remains elevated. Ongoing supply disruptions continue to pose a material risk to the economy, while the correction in the housing market poses some additional downside risk to growth. For both growth and inflation, productivity remains a key challenge.

Read the NAB Australian Forward View September.