The internal modelling was done in February and revealed via a freedom of information request.

A second set of documents from September simulated the chance of recession in Australia and confirm the central bank’s path to return inflation to target without crashing the economy is indeed narrow.

In February, staff at the central bank modelled what would happen if the cash rate was to rise steadily to 4.8 per cent by August. Under this scenario, inflation would likely return to target of two to three per cent by the end of next year.

The bank’s staff also investigated keeping the cash rate steady at 3.35 per cent, where it was sitting in February, which would have seen inflation returning to the two to three per cent mid-point by the end of 2025.

In February, when the modelling was done, strong inflation numbers triggered a more hawkish tone from the bank.

Since then, inflation has been moderating, but that didn’t stop the RBA pulling the trigger on another interest rate hike in May.

Officials at the central bank have regularly pointed to a preferred interest rate path that pushes inflation back within target by mid-2025, preserving most people’s jobs in the process.

NAB markets economists Tapas Strickland and Taylor Nugent said there were some important points to be gleaned from the internal note, including that a cash rate of 4.8 per cent – more in line with international peers – would not have been unimaginable in February.

“…and may still be plausible if the RBA board desired a faster return of inflation to target or was sharply surprised by the data,” they wrote.

Most economists expect the cash rate to stay on hold at 3.85 per cent or for one more 25 basis point hike before they peak.