With shocks like the Middle East oil crisis and Donald Trump's Liberation Day tariffs increasingly becoming the norm, the central bank may have to deal with persistently higher inflation and lower activity, chief economist Sarah Hunter said in a speech on Wednesday.
The trade-off complicates the RBA's job as it balances its dual mandates of low inflation and full employment.
"Inflation may respond more strongly if shocks occur while underlying inflation is already elevated - reflecting firm pricing behaviour or an increased risk of inflation expectations becoming de-anchored," Dr Hunter told the Australian Conference of Economists in Canberra.
"At the same time, the effects on activity could be larger if households and businesses become more cautious or if their financial buffers have been eroded by earlier shocks, although this may be partly offset if households increase labour supply."
In response, the RBA needed to increase its knowledge and capability to deal with supply shocks.
The bank will publish a new series of research from its staff and broaden its communications to make it more accessible to a broader audience, Dr Hunter said.
Even though inflation expectations have been anchored for decades, more frequent supply shocks could cause them to increase, she said.
If that occurs, inflation could become more persistent.
Persistent inflation has caused Australians' real wages to decline 5.1 per cent since March 2021, the Paris-based Organisation for Economic Co-operation and Development revealed in its annual employment outlook.
That represents one of the steepest declines among OECD countries.
Across the OECD's 37 member countries, excluding Colombia, median real wages grew by 1.2 per cent over the same period.
Only New Zealand, Italy, Sweden and Czechia have experienced similar declines.
"This sustained erosion of purchasing power points to persistent pressures on household incomes, even as the labour market has remained broadly solid," the report said.
Over the past year, Australians' real wages fell 0.8 per cent.
Real wages growth is a rough driver for living standards, given it represents how much more income workers have relative to prices.
The report said Australia had some of the weakest workplace protections against employers firing permanent employees in the OECD, although recent reforms had tightened regulations for temporary workers.
Australia's workplace regulations remained significantly more strict than the US, the UK and Canada.
