Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser warned that the central bank remains prepared to tighten monetary policy further if persistent inflation risks materialize.
A senior official from Australia’s central bank warned on Wednesday that interest rates may need to rise again if inflation risks build up, repeating a stern warning after policymakers left rates unchanged for a second straight meeting.
Speaking at an event in Queensland, Reserve Bank of Australia Deputy Governor Andrew Hauser highlighted three main inflation risks: the conflict in the Middle East, the global AI boom, and weak productivity growth.
“If those inflation risks become reality and prices don’t start coming down, we will raise interest rates again.”
The Reserve Bank of Australia kept interest rates at 4.35% last week, after raising them by 0.75 percentage points since February to cool down sticky inflation. The bank has cautioned that more rate hikes remain possible.
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As a result, economic growth has lost momentum, inflation metrics have cooled faster than projected, and the property market has experienced a sharper slowdown than the market central bank anticipated.
Financial markets currently reflect roughly a 60% probability of an additional rate hike to 4.6% by December. This expectation is driven by oil prices rising to three-week highs amid ongoing Middle East tensions, though investors anticipate that such a move would signal the conclusion of this interest rate hiking cycle.
