![\"AUSTRALIA](\"https:\/\/www.newsbeep.com\/ie\/wp-content\/uploads\/2026\/04\/72cadc8da07a1ec923eb0b51f5f5d7d0.jpeg\")
RBA deputy governor Andrew Hauser warns of a nightmare economic scenario. Picture: NewsWire \/ Nicholas Eagar <\/p>\n RBA deputy governor Andrew Hauser warns of a nightmare economic scenario. Picture: NewsWire \/ Nicholas Eagar <\/p>\n
Australian mortgage holders are being warned of a \u201cnightmare scenario\u201d including higher interest rates as the fallout from the Middle East smashes household budgets.<\/p>\n
In a fireside chat at the Money Marketeers in New York, Reserve Bank of Australia deputy governor Andrew Hauser warned of the potential fallout from the Middle East oil price shock, as consumer sentiment surveys show Australia\u2019s confidence reaches a record low.<\/p>\n
\u201cI don\u2019t think those surveys tell you a lot about what consumption is going to do but, if they are right, we have a big income shock coming our way,\u201d he said<\/p>\n
\u201cIt is the central bankers nightmare, you know, inflation up, activity down and judging the balance between the two is how we earn our money.\u201d<\/p>\n
Stagflation is the worst case scenario for an economy where inflation rises despite spending falling, with the combination creating a complicated policy decision for the RBA.<\/p>\n
RBA deputy governor Andrew Hauser warns of a nightmare economic scenario. Picture: NewsWire \/ Martin Ollman <\/p>\n
The RBA boss also warned the Middle East price shock is making it harder for the central bank to get inflation to target between 2 to 3 per cent.<\/p>\n
\u201cI wouldn\u2019t say we \u200bhave high confidence that we\u2019ve set interest rates at the right level \u200bbecause you never do have that high confidence. But we\u2019re going to have to monitor this new shock pretty carefully,\u201d Mr Hauser said.<\/p>\n
\u201cI think it\u2019s easy to \u200bsee that upside inflation pressure. More important for us now is to think through what the medium-term impact might be.\u201d<\/p>\n
Mr Hauser warned inflation is \u201ctoo high\u201d with the energy price spike from The Gulf conflict adding a \u201cbig income shock for Australia\u201d.<\/p>\n
The conflict between the US\/Israel and Iran has led to the blockage of the Strait of Hormuz, a critical waterway where one-fifth of the world\u2019s oil once passed daily.<\/p>\n
Rising oil prices is putting pressures on Australian households. Picture: NewsWire \/ John Appleyard <\/p>\n
Before the conflict in the Middle East started six weeks ago oil prices were roughly $US56 ($A80) a barrel, before trading around $US100 ($A143) a barrel.<\/p>\n
For every $10 increase in the price of oil, roughly equals 10 cents more Australians pay at the fuel pump.<\/p>\n
Prior to the start of the conflict in the Middle East on February 28, Australia\u2019s Consumer Price Index rose to 3.7 per cent in February, down 0.1 per cent from the previous month.<\/p>\n
This was above the RBA\u2019s target range of between 2-3 per cent.<\/p>\n
Treasurer Jim Chalmers previously warned of modelling of short and long-term fuel disruption scenarios \u2013 which showed inflation could near 5 per cent.<\/p>\n
He later grimly warned this \u201clook pretty conservative now\u201d.<\/p>\n
\u201cWe\u2019ve asked for some more, challenging circumstances to be modelled,\u201d he said.<\/p>\n
The timing of the war and how long it would take for the economy to \u201cget back on track after the hot part of hostilities\u201d were the main considerations, Mr Chalmers said.<\/p>\n
\u201cThose are really the two key variables which play out in all of our scenario planning and all of our modelling,\u201d he said.<\/p>\n
Mr Hauser does not predict Australia will enter a recession, even as consumption remains relatively low.<\/p>\n
The RBA has lifted interest rates twice this year back to 4.1 per cent, undoing two of the three interest rate cuts from last year, bringing them back to their highest levels since April 2025.<\/p>\n
Currently markets are pricing in around a 65 per cent chance of further interest rate pain when the RBA next meets in May \u2013 the week before the federal budget is handed down.<\/p>\n","protected":false},"excerpt":{"rendered":"RBA deputy governor Andrew Hauser warns of a nightmare economic scenario. Picture: NewsWire \/ Nicholas Eagar Australian mortgage…\n","protected":false},"author":2,"featured_media":397415,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[72,113,61,5232,60,1196,175708,23260],"class_list":{"0":"post-397414","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-ie","11":"tag-interest-rates","12":"tag-ireland","13":"tag-middle-east","14":"tag-rba-boss","15":"tag-reserve-bank-of-australia"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/397414","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=397414"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/397414\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/397415"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=397414"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=397414"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=397414"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}