RBA deputy chief flags worse-than-expected inflation ahead of November vote
Andrew Hauser, the Reserve Bank of Australia's second-in-command, told a Sydney investment gathering that price growth is tracking above the bank's own projections, a hawkish signal ahead of next month's rate meeting that could move the Australian dollar.
Speaking during a fireside conversation at an investment conference in Sydney, Hauser noted that elevated inflation has persisted for an extended period and cautioned that the central bank must prevent household and corporate expectations from drifting away from its official target. He noted that businesses now identify cost pressures as their single biggest concern.
He also referenced early signs of cooling in both the labour market and housing figures, indicating that existing policy restriction is already producing effects. Nonetheless, Hauser stopped short of signalling any predetermined path, noting that internal projections are still being refined and that he could not predict how board members would ultimately vote.
His remarks come after the RBA’s board voted unanimously to lift the cash rate by 25 basis points to 4.60% on 29 September, the fourth such move this year. Hauser has repeatedly identified inflation as the central bank’s primary worry in recent months, attributing part of the pressure to the conflict in the Middle East, a worldwide surge in investment linked to artificial intelligence, and constrained supply.
Attention now turns to the third-quarter consumer price figures due on 28 October, the last major data point before the RBA board meets on 2-3 November. The rate verdict is scheduled for 3 November at 2:30pm Sydney time (03:30 GMT). A stronger-than-expected inflation print would strengthen the case for another increase.
Market implications: A hawkish tone from RBA officials such as Hauser could lend support to the Australian dollar and lift yields on shorter-maturity Australian government debt if traders raise the odds of a further hike. The forthcoming inflation report is likely to be the key driver for AUD/USD and interest-rate expectations in the run-up to the November decision.
Sources: Investing.com (economy); Investing.com (economy); investingLive