We still have work to do to reduce inflation which remains far too highTimely policy steps to reduce inflation could have smaller unemployment costsWe took pro-active policy action to reduce excessive capacity pressures with rate hikesLower global oil prices would be a welcome development but full conflict resolution is not yet assuredThere have been important economic developments since May, not least the prospect of the US-Iran deal<\/p>\n
RBA’s Hauser said that Australia still faces a significant inflation challenge despite some improvement in recent data. He stressed that they still have work to do to bring inflation back to target, warning that price growth remains \u201cfar too high\u201d justifying the RBA\u2019s cautious stance. <\/p>\n
Hauser\u2019s remarks broadly align with the RBA\u2019s latest June policy decision where the Board left the cash rate unchanged at 4.35% after three consecutive rate hikes, but maintained a tightening bias. The central bank acknowledged that inflation had picked up materially in the second half of 2025 and remains above the 2\u20133% target band even as policymakers opted to pause to assess the lagged effects of earlier tightening. <\/p>\n
Hauser emphasized that acting early against inflation can reduce the eventual damage to the labour market, noting that timely policy action could lower unemployment costs compared with delaying tightening. That argument helps explain the RBA\u2019s rate increases earlier this year, which he said were intended to proactively ease \u201cexcessive capacity pressures\u201d in the economy before inflation became more entrenched.<\/p>\n
Recent Australian data has been mixed. Headline inflation cooled to 4.0% y\/y in May from 4.2%, helped by lower fuel prices, suggesting some relief from energy-driven price pressures. However, the more important trimmed mean inflation, closely watched by the RBA, accelerated to 3.6% from 3.4%, indicating underlying inflation remains sticky. This persistence in core inflation is likely to keep the RBA cautious. <\/p>\n
On the labour side, conditions have softened but not cracked. Australia\u2019s unemployment rate rose to around 4.5%, signaling some easing in labour-market tightness, yet employment and wage pressures remain resilient enough to sustain demand-side inflation risks. Hauser\u2019s confidence that unemployment costs from tighter policy may remain limited reflects the RBA\u2019s view that the labour market still has enough strength to absorb restrictive policy without a sharp deterioration. <\/p>\n
Hauser also addressed the global backdrop, particularly geopolitical risks tied to the Middle East. He said lower global oil prices would be welcome, but cautioned that a full resolution of the conflict is still uncertain. The RBA therefore remains wary of renewed energy shocks feeding back into headline inflation. <\/p>\n
Overall, Hauser\u2019s comments suggest the RBA is far from declaring victory on inflation. The market is not pricing in any more rate hike by year-end with just 14 bps of tightening expected in 2026.<\/p>\n","protected":false},"excerpt":{"rendered":"We still have work to do to reduce inflation which remains far too highTimely policy steps to reduce…\n","protected":false},"author":2,"featured_media":655489,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,1294,56,54,55],"class_list":["post-655488","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/655488","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=655488"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/655488\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/655489"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=655488"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=655488"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=655488"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}