{"id":935617,"date":"2026-10-21T02:06:13","date_gmt":"2026-10-21T02:06:13","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/935617\/"},"modified":"2026-10-21T02:06:13","modified_gmt":"2026-10-21T02:06:13","slug":"odds-of-fifth-interest-rate-hike-this-year-shorten-as-rba-deputy-warns-inflation-outlook-worsening-reserve-bank-of-australia","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/935617\/","title":{"rendered":"Odds of fifth interest rate hike this year shorten as RBA deputy warns inflation outlook \u2018worsening\u2019 | Reserve Bank of Australia"},"content":{"rendered":"

The chance of a fifth interest rate hike on Melbourne Cup day has jumped after Andrew Hauser, the Reserve Bank\u2019s deputy governor, warned of \u201chard choices\u201d amid a \u201cmaterially worse\u201d inflation outlook.<\/p>\n

Hauser, speaking at an investment bank conference in Sydney on Wednesday morning, said the RBA monetary policy board members were juggling a slowing economy with fears that Australians were starting to lose faith in the central bank\u2019s ability to bring inflation back to the 2.5% target.<\/p>\n

\u201cWe\u2019re in a world of hard choices. I think that\u2019s the reality here,\u201d he said.<\/p>\n

\u201cThe basic fact [is] that inflation has been high for a very long time now, and we are beginning to see some signs that some people in the community are not sure if we\u2019re going to bring inflation back into target at all, or certainly not for an extended period,\u201d he said.<\/p>\n

The chance of an interest rate increase on 3 November jumped from 30% before Hauser\u2019s comments to 45% afterwards, according to pricing in financial markets. If delivered, it would be the fifth rate rise for the year and would leave the RBA\u2019s official cash rate target at 4.85%, from 4.6% now, and its highest level since the global financial crisis.<\/p>\n

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A worsening Middle East conflict has pushed inflation to 4% in the year to August, and Hauser said businesses were starting to see 3.5% inflation as the \u201cnew normal\u201d. Removing an entrenched inflation psychology could require higher interest rates, he warned.<\/p>\n

Australia\u2019s second top central banker admitted it was difficult explaining to the public why the RBA was \u201claying pain on top of pain\u201d by raising interest rates at a time when offshore shocks were driving up fuel prices.<\/p>\n

\u201cIf someone overseas raises the price of a good that we\u2019re buying, let\u2019s call it oil, we\u2019re all poorer, and we have to accept that fact,\u201d Hauser said.<\/p>\n

\u201cWhat we can do and what we must do is prevent one-off supply shocks or persistent supply shocks feeding through into higher second-round effects, higher inflation expectations. That will just make a bad thing worse.\u201d<\/p>\n

While inflation was clearly too high, the picture for the economy was \u201cmore mixed\u201d.<\/p>\n

High interest rates and high petrol prices were weighing on activity, Hauser said. Last week\u2019s jobs figures \u2013 which showed unemployment reaching a five-year high <\/a>of 4.7% \u2013 were \u201ca little bit weaker than people had expected\u201d.<\/p>\n

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\u201cClearly, we need a period of below-trend growth to bring inflation down, and we\u2019re seeing that happening,\u201d he said.<\/p>\n

But Hauser pointed to surprisingly strong economic growth among Australia\u2019s major trading partners in Asia, and the boom in datacentre investment. Oil prices were about a third higher than the bank had predicted in August.<\/p>\n

This created the difficult trade-offs facing the RBA\u2019s rate-setting board, he said. \u201cDo you do more to tackle higher inflation, recognising that that means weaker activity, a weaker labour market?<\/p>\n

\u201cOr do we hold our horses to protect the labour market \u2026 mindful of the potential that there may be more downside momentum of the economy, but accept the risks in so doing that this upside inflation risk embeds [into Australians\u2019 expectations], and that becomes more expensive to deal with?\u201d<\/p>\n

He added: \u201cThose are hard choices. They\u2019re not where we\u2019d like to be ideally as the central bank, but I think that\u2019s the that\u2019s what we\u2019re facing into as we as we meet the week after next.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"The chance of a fifth interest rate hike on Melbourne Cup day has jumped after Andrew Hauser, the…\n","protected":false},"author":2,"featured_media":935618,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[64,63,99],"class_list":["post-935617","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-au","tag-australia","tag-business"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/935617","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=935617"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/935617\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/935618"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=935617"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=935617"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=935617"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}