SYDNEY--The Reserve Bank of Australia's strategy aiming to bring inflation back to target while protecting jobs hasn't worked out, and a painful recession could ensue, says a former central bank official.

John Simon, who led the central bank's research department for a decade up until mid-2024, has been a long-time critic of the RBA's cautious approach toward taming inflation.

"It is past time for the RBA to shift strategy. The failure of the narrow path strategy has been obvious since at least the second half of last year," Simon said Thursday.

The RBA's approach meant that it didn't raise interest rates as far as some of its global counterparts did when inflation jumped sharply at the conclusion of the Covid-19 pandemic.

Last year, that approach appeared to be working as the RBA cut interest rates three times and inflation cooled, while unemployment remained at historically low levels.

But 2026 has been a much different story, as the central bank has been forced to quickly rescind the cuts delivered in 2025 due to the persistence of inflation, fueled by both global and domestic factors.

RBA Deputy Gov. Andrew Hauser said in a prime-time television interview on Tuesday that businesses and consumers are "furious" that inflation has been too high for too long. Hauser indicated that if inflation remains elevated, then a heavier hand will be required.

To some extent, financial markets are already pricing in a turning point for the RBA, with traders betting the central bank will raise interest rates a fourth time this year at its policy meeting later this month.

But Simon argues that the turning point should have come nearly a year ago.

"Because the RBA has dithered for so long, and allowed inflation expectations to drift up, the economic cost of getting inflation back to target is higher now than it was a few years ago," Simon said.

"The irony is that by trying to preserve the gains in the labor market, they will ultimately be forced to raise interest rates higher, and push unemployment higher, than if they had shown the necessary courage earlier," he added.

A recession may ensue, Simon warned.

"But trying to avoid a recession in the short term and allowing inflation to continue drifting higher would be to repeat the mistakes they have already made," Simon said.

"They cannot avoid the economic reckoning, they can only delay it. Moreover, delay makes the ultimate reckoning worse," he added.

Key RBA officials, including Gov. Michele Bullock, have warned over the last month that there is the potential for interest rates to rise further, with core inflation still well above the target band.

The central bank cited the unresolved war in the Middle East, an investment urge linked to data-center construction and weak productivity growth as key risk factors likely to keep inflation high.

The narrow path strategy was always flawed, Simon said.

"It was, in essence, a hope rather than a strategy, as it involved doing the absolute minimum on inflation and hoping that circumstances would cooperate," he said.

"They haven't. But, even before the narrow path's weaknesses were revealed by circumstances, it was a poor strategy: It was inherently fragile as it had no tolerance for even modest inflationary surprises," Simon added.

The RBA has already suffered major reputational damage from its failure to achieve its goals over the past decade, he said.