Reserve Bank of Australia’s deputy governor warns of higher rates if inflation risks crystallise
The central bank has warned further policy tightening cannot be ruled out
Australia’s Reserve Bank has warned that interest rates could rise again if inflation risks materialise, a top official indicated on Wednesday, August 19. Deputy Governor Andrew Hauser, speaking at an event in Queensland, cautioned of three potential inflation drivers: the Middle East conflict, the global AI boom, and weak productivity.
Hauser stated that if these risks materialise and inflation remains high, the RBA will have to raise rates once more. The central bank maintained interest rates at 4.35% last week, following a 75 basis point increase since February to curb inflation. Despite this, the economy has decelerated, inflation has fallen short of expectations, and the housing market has weakened beyond the central bank's forecast.
Markets suggest a 60% chance of another rate hike to 4.6% by December, driven by soaring oil prices amid the Middle East standoff. However, investors believe this will likely be the final rate hike. Hauser noted that consumption and employment growth have slowed, though not to the extent of a depression, but still significantly slower than in the past and recent years.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
This story
This is one outlet's version. Read the fullest account.
