This essay examines the recent deflation threat to the Australian economy, highlighting the lower-than-expected inflation rate influenced by both domestic and international economic conditions. It discusses the Reserve Bank of Australia's (RBA) role in setting inflation targets and adjusting cash rates, noting the fixed interest rate of 1.50 percent over the past two years. The analysis considers structural factors like globalization, labor market status, and technical changes that contribute to low inflationary pressure. The essay also explores the RBA's monetary policy tools, the current economic environment, the connection between recession and inflation, and the importance of leverages in the economy, ultimately concluding on the need for continued vigilance and appropriate policy responses to maintain economic stability.