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Big bank job cuts could halt RBA rate hikes as unemployment rises
Major banks are slashing thousands of jobs.
ANALYSIS
Australia looks destined for another rate at the November RBA meeting, unless it is prevented by the most unlikely of industries … the banking sector.
Inflation remains too high, which is of course the main concern for the central bank when considering whether to move the cash rate.
But the other number the RBA board keeps a close eye on is the unemployment rate.
And that is on the rise as more jobs are cut around the country, especially by our major lenders.
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NAB recently announced plans to cut up to 2500 jobs, which would account for 6 per cent of its workforce.
Unemployment has been on a sharp rise in 2026. Picture: John Appleyard
ANZ has had a transformational 2026, with a major cost-cutting initiative doing away with 4500 roles (3500 employees and 1000 contractors).
Westpac recently added another 140 planned job cuts to an initial plan of 102.
Meanwhile, CBA will bring its total job cuts for the year to 1000, once it axes 232 more positions by the end of 2026.
And then there are second tier and minor lenders. Bendigo Bank’s restructure this year affected more than 630 roles, while Bank of Queensland trimmed 200.
All up, there are more than 100 lenders that issue home loans in Australia and the dwindling property market will be putting most of them under pressure. Job cuts will no doubt be widespread through the entire sector.
MORE:One of Australia’s biggest lenders going broke
Australia’s workforce is at about 14 million people, so 14,000 jobs is all it takes to move the national unemployment rate by 0.1 per cent.
If banks and other lenders keep cutting jobs, could they contribute to the unemployment rate moving far enough that it stays the RBA’s hand and prevents a future rate hike?
RBA Governor Michele Bullock has in past years emphasised the importance of unemployment figures in shaping cash rate decisions.
RBA Governor Michele Bullock is “not worried” about the pace of the rise. Picture: John Appleyard
This time in 2025 we were looking at an unemployment rate of 4.2 per cent and suggesting that if it rose to 4.5 per cent, the RBA board may consider a rate cut.
At the time, the RBA was still forecasting a 4.3 per cent unemployment rate through to 2027.
Well, those forecasts didn’t age well.
As of the most recent Australian Bureau of Statistics (ABS) data, the current unemployment rate has raced up to 4.7 per cent.
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Announcing the numbers in October, the ABS head of labour statistics Sean Crick said “this month there were 39,000 less employed people and 9000 more unemployed people.
“This September, a higher proportion of people remain unemployed compared to recent years.”
The rise made it three months in a row of increases, up from 4.6 per cent in August, 4.5 per cent in July and 4.4 per cent in May.
This year, unemployment has risen by 0.6 per cent after being 4.1 per cent in January, but Bullock seems to have changed her tune somewhat.
She was asked, when appearing before the Senate estimates committee, whether she was concerned by how quickly the rate had risen.
“We’re not worried about the pace of increase in the unemployment rate at this stage,” she answered, noting that it needed to increase, but refusing to put an ideal figure on it.
“We think that it’s probably above where the unemployment rate is at the moment.”
The RBA likes to use language as an extra tool, so these statements are always open to interpretation, but it looks like we may be in for higher rates, higher unemployment and also recession. It’s the spring trifecta nobody is cheering for.
