> ## Content Index > Fetch the complete content index at: https://www.notatechguy.com/llms.txt > Use this file to discover other available public pages before exploring further. # RBA survey: most Australians get interest rates backwards - URL: https://www.notatechguy.com/rba-survey-most-australians-get-interest-rates-backwards/ - Published: 2026-08-02T04:30:29.000Z - Updated: 2026-08-02T04:30:29.000Z - Description: More than half of Australians surveyed by the RBA think higher interest rates push inflation up, not down, and it changes how monetary policy actually - Author: Marcello Babbili - Tags: Property & Economy, RBA, Inflation, Interest Rates Over half of the Australian population believes that increasing interest rates actually drives inflation higher, rather than bringing it down [P⁵](https://www.rba.gov.au/publications/bulletin/2026/jul/listening-to-australians-a-new-rba-survey-of-the-community.html?ref=notatechguy.com). That finding, in the Reserve Bank's July 2026 community survey, means the central bank's primary tool for managing the economy may work differently than its models assume. If households believe a rate hike makes prices rise faster, what do they actually do when the RBA moves? **My read:** This is the most quietly damaging finding I've seen from the RBA in years. The central bank has spent decades calibrating rate moves based on how it expects people to respond. If more than half of the country has the mechanism backwards, the transmission of monetary policy, the chain from a rate decision to your mortgage payment to your spending choices, is running through a population that doesn't know which direction the lever points. I don't buy the "we're paying for it" framing in the Fairfax reporting [S¹](https://www.smh.com.au/business/the-economy/most-of-us-get-this-economics-question-wrong-we-re-paying-for-it-20260730-p60k08.html?ref=notatechguy.com) as a quantified claim, because the survey doesn't put a dollar figure on the cost. But the logic is sound: people who misunderstand rates make worse financial decisions, and the RBA's own 2023 literacy work said exactly that [P⁶](https://www.rba.gov.au/publications/bulletin/2023/sep/economic-literacy-in-australia-a-first-look.html?ref=notatechguy.com). ## What the survey actually found The July 2026 RBA Bulletin, titled "Listening to Australians: A New RBA Survey of the Community," details the outcomes of a poll created to see how everyday people perceive and comprehend the economy [P⁵](https://www.rba.gov.au/publications/bulletin/2026/jul/listening-to-australians-a-new-rba-survey-of-the-community.html?ref=notatechguy.com). The standout result: more than half of respondents believed higher interest rates would push inflation up. The central bank's evaluation is direct, noting that people have major blind spots regarding the mechanics of monetary policy and the way borrowing costs influence price growth [P⁵](https://www.rba.gov.au/publications/bulletin/2026/jul/listening-to-australians-a-new-rba-survey-of-the-community.html?ref=notatechguy.com). This is not a marginal error. The relationship between interest rates and inflation is the entire basis of modern central banking. When the RBA raises the cash rate, borrowing becomes more expensive, spending slows, demand cools, and price pressure eases. That is the intended direction. More than half of the country thinks it runs the other way. The Fairfax newspapers, including the Sydney Morning Herald and Brisbane Times, reported the finding on July 30 under the headline that Australians are "paying for" this misunderstanding \[S1, S3\]. The RBA's survey itself does not put a dollar figure on the cost. But the bank's earlier work on economic literacy, published in September 2023, argued that individuals with economic literacy tend to make better financial decisions [P⁶](https://www.rba.gov.au/publications/bulletin/2023/sep/economic-literacy-in-australia-a-first-look.html?ref=notatechguy.com). The connection the reporting draws is logical, if not quantified: if you think a rate rise will push prices up, you might demand higher wages to compensate, or delay a purchase expecting things to get cheaper later, or misjudge the right time to fix a mortgage. ## Why the direction matters Think of it as a thermostat. If you believe turning the dial up makes the room colder, you will crank it the wrong way at the wrong time. The RBA raises rates to cool the economy. If a majority of households think rate rises heat things up, their behaviour in response to a hike could work against the intended effect, or at least muddle it. A homeowner with a variable mortgage who thinks the RBA's rate rise will push inflation higher might rush to lock in spending now, before prices climb further. That is the opposite of what the RBA wants. The intended response is slower spending, more saving, less pressure on prices. The survey suggests the chain might be breaking at the last link, the part where people change their behaviour. The RBA has been surveying public understanding since at least 2023, when its first literacy bulletin found that understanding varies widely across the population [P⁶](https://www.rba.gov.au/publications/bulletin/2023/sep/economic-literacy-in-australia-a-first-look.html?ref=notatechguy.com). The July 2026 survey goes further, directly testing the interest rate and inflation relationship and finding the gap is not at the margins but at the centre. ## What to do about it For mortgage brokers, this survey changes the conversation you should be having. When a client calls after a rate rise, panicked about what it means for their repayments and the broader economy, their default assumption may be wrong. They might think the rate rise itself will push their cost of living higher through inflation, rather than understanding that the rise is the RBA's attempt to bring inflation down. Explaining the direction of the relationship, calmly and concretely, is now part of the job. For real estate agents, buyer behaviour in the days after a rate decision may not follow the textbook pattern. If buyers think a rate rise means inflation is accelerating, some may rush to purchase before prices climb further, rather than pulling back. Watch for that signal in open-home traffic after the next RBA decision. For landlords and property managers, the same misunderstanding can distort rent expectations. A landlord who thinks rate rises increase inflation may push for larger rent increases, expecting their costs and the broader price level to keep climbing. The actual mechanism, higher rates cooling demand and eventually easing price pressure, points the other way. One practical thing to check this week: if you have a variable-rate mortgage, pull up your last rate-change letter from the bank and trace the chain. The RBA moved the cash rate, your bank passed it on, your repayment changed. That is the mechanism working as intended. The question is whether your spending changed in the direction the RBA expected. ## What we don't know yet The survey tells us what people believe, but not yet what they do. The RBA has not published data on whether households that misunderstand the rate-inflation relationship actually behave differently when rates move. The "paying for it" claim in the Fairfax reporting [S¹](https://www.smh.com.au/business/the-economy/most-of-us-get-this-economics-question-wrong-we-re-paying-for-it-20260730-p60k08.html?ref=notatechguy.com) is a reasonable inference, not a measured cost. We also don't know whether the gap is narrowing or widening. The 2023 literacy bulletin [P⁶](https://www.rba.gov.au/publications/bulletin/2023/sep/economic-literacy-in-australia-a-first-look.html?ref=notatechguy.com) was the RBA's first systematic look. The July 2026 survey [P⁵](https://www.rba.gov.au/publications/bulletin/2026/jul/listening-to-australians-a-new-rba-survey-of-the-community.html?ref=notatechguy.com) is the second data point. Two points do not make a trend. The next signal: the RBA's August 2026 board meeting and monetary policy statement, where the bank will explain its latest reading of the economy. Listen for whether the RBA acknowledges the public-understanding problem in its communication, or continues to assume the audience gets the basics. We will check the statement against this survey finding. --- *Sources: [S1 — The Reserve Bank says most Australians dont get how interest rates wor](https://www.smh.com.au/business/the-economy/most-of-us-get-this-economics-question-wrong-we-re-paying-for-it-20260730-p60k08.html?ref=notatechguy.com) · [S2 — The Reserve Bank says most Australians dont get how interest rates wor](https://www.watoday.com.au/business/the-economy/most-of-us-get-this-economics-question-wrong-we-re-paying-for-it-20260730-p60k08.html?ref=notatechguy.com) · [S3 — The Reserve Bank says most Australians dont get how interest rates wor](https://www.brisbanetimes.com.au/business/the-economy/most-of-us-get-this-economics-question-wrong-we-re-paying-for-it-20260730-p60k08.html?ref=notatechguy.com) · [P4 — Reserve Bank of Australia](https://www.rba.gov.au/?ref=notatechguy.com) · [P5 — Listening to Australians: A New RBA Survey of the Community | Bulletin](https://www.rba.gov.au/publications/bulletin/2026/jul/listening-to-australians-a-new-rba-survey-of-the-community.html?ref=notatechguy.com) · [P6 — Economic Literacy in Australia: A First Look | Bulletin – September 20](https://www.rba.gov.au/publications/bulletin/2023/sep/economic-literacy-in-australia-a-first-look.html?ref=notatechguy.com)* ## More from Not A Tech Guy - [Will the RBA Raise Rates in August 2026? Our Model Just Flipped to Hike](https://www.notatechguy.com/rba-august-2026-decision-after-june-cpi/) - [ABS CPI release moves earlier from 2027, skips weight update](https://www.notatechguy.com/abs-cpi-release-moves-earlier-from-2027-skips-weight-update/) - [Australian wages growth steady at 3.3%, private sector cools](https://www.notatechguy.com/australian-wages-growth-steady-at-3-3-private-sector-cools/) --- *Generated from an audited evidence pack with primary-source research. Social-media items are discussion signals, not verified facts. Nothing here is financial, legal or medical advice.* ![Australians' understanding of how interest rates affect inflation](https://storage.ghost.io/c/6e/89/6e896869-22ef-4281-a213-b4c462c17cff/content/images/2026/08/chart_15bfae0dcf804271c1d0.png)