RBA deputy warns inflation outlook 'materially worse' as next decision looms
As markets put the chance of a rate hike in November at 42 per cent, Reserve Bank deputy governor Andrew Hauser warns of a "central banker's nightmare".
The RBA's deputy governor warns that the inflation outlook may be worse than previously anticipated, as the next interest rate decision approaches. Market projections suggest a 42 percent chance of a November rate hike, with the RBA's board meeting at the beginning of November to decide on a rate change. Deputy Governor Andrew Hauser emphasizes that high inflation is becoming entrenched in the Australian economy, with some people questioning whether it can return to the RBA's target rate.
The RBA's inflation target is between 2 and 3 percent on average, but current inflation stands at 4 percent. Hauser notes that businesses are increasingly viewing 3-3.5 percent inflation as the new normal, which he deems the central banker's nightmare. He stresses the importance of maintaining expectations aligned with the target rate.
The deputy governor acknowledges the challenges posed by various factors, including geopolitical tensions, technological advancements, and weak productivity growth, as the RBA grapples with balancing short-term pain and preventing long-term, more severe economic consequences.
Written by urgent.news from ABC News AU's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
