Home›Bonds & Rates›Central Banks›RBA warns rates could rise again if inflation progress…

RBA warns rates could rise again if inflation progress stalls

The RBA kept its tightening “optional” stance after holding the cash rate at 4.35%, while pointing to Middle East driven oil risks, AI demand pressures, and weak productivity.

Reported · Written up by our desk · Central Banks

RBA Deputy Governor Andrew Hauser said the central bank will need to raise interest rates again if inflation stops improving, reinforcing the RBA’s August decision to maintain explicit tightening optionality even after a cash rate hold.

Hauser highlighted three upside risks to inflation, including renewed concerns tied to the Middle East conflict as oil prices climb, potentially lifting energy and transport costs. He also cited the global AI boom, which can support demand while competing for resources, and weak productivity growth that can limit economic expansion without adding price pressure.

While Hauser acknowledged tighter policy is already slowing Australia’s economy, he said the RBA has seen “a bit of a slowdown” in consumption and employment growth and that policymakers need to see more before changing course.

Markets are pricing about a 60% chance of another increase to 4.60% by December, leaving the RBA dependent on upcoming inflation and labor market data to determine whether disinflation continues or the risks Hauser flagged materialize, according to Action Forex.

More like this

Sources