IMF finds RBA rate hikes pushed Australians into extra jobs
The International Monetary Fund has found that thousands of Australians took on second or third jobs during the Reserve Bank of Australia's rapid 2022-23 rate hikes. The result overturns the standard assumption that tight monetary policy reduces labour supply.
An annex to the IMF's Article IV consultation report estimates that the RBA's 425-basis-point tightening cycle in 2022-23 pushed an extra 130,000 Australians a year into a second or third job. Mortgage payments climbed to 33% of household income after the cycle, with owner-borrowers in Sydney and Brisbane hit hardest.
Contrary to expectations, tight policy lifted the participation rate to 67.2%, the highest in Australian records. That capped wage gains and helped services inflation cool faster than projected. The RBA's strategic review will build the channel into a new analytical framework guiding future decisions.
The report also highlights that fiscal bracket creep amplified the rate-shock effect. Treasury this week reopened the annual tax-indexation debate; the 2026/27 budget projects bracket creep will cost households an extra 22.4 billion dollars in lost real income.
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