Hauser’s remarks lean hawkish, very IMO, and are likely to keep a further rate rise in play for 3 November, which would tend to support the Australian dollar and push short-dated Australian yields higher if markets add to hike pricing. His acknowledgment of slowing labour and housing data offers the doves something to work with, but his emphasis on inflation expectations suggests the bar for holding is rising. The September-quarter CPI on 28 October now looks decisive: an upside surprise would strengthen the case for a fifth hike this year. Energy prices remain a wildcard, with the RBA having previously cited the Middle East conflict and its effect on oil as a complication layered on top of domestic demand pressures.

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Hauser stopped short of pre-announcing a hike, but an inflation outlook running worse than forecast and a warning on expectations leave November firmly live.

Summary:

• RBA Deputy Governor Andrew Hauser said the inflation outlook looks worse than forecast, a bit above expectations
• He said inflation has been high for a very long time and the RBA cannot allow inflation expectations to move away from target
• Businesses are reporting cost pressures as their number one problem
• He acknowledged some slowing in labour market and housing data and said monetary policy is working
• Staff forecasts are still being finalised and he does not know for sure what the Board will decide
• The cash rate is 4.60% after a hike on 29 September; the next decision is due on 3 November, with Q3 CPI out on 28 October

Reserve Bank of Australia Deputy Governor Andrew Hauser said the inflation outlook looks worse than the central bank had forecast, in comments that lean hawkish less than two weeks before the RBA’s next policy decision on 3 November.

Speaking at a fireside chat at Citi’s Australia and New Zealand Investment Conference in Sydney on Wednesday morning, Hauser said the outlook for inflation was running a little above expectations. He stressed that inflation had been high for a very long time and that the RBA could not allow inflation expectations to drift away from its target, a signal that policymakers see the risk of price pressures becoming entrenched as a growing concern.

Hauser said businesses were reporting cost pressures as their number one problem. He acknowledged some slowing in labour market and housing data and said monetary policy was working, but added that the inflation outlook had nonetheless deteriorated.

He was careful not to pre-empt the Board. Hauser said staff were still finalising their forecasts and that he did not know for certain what the Board would decide. The November meeting comes with a fresh set of RBA economic projections, which will show how far the inflation outlook has shifted.

The RBA raised its cash rate by 25 basis points to 4.60% on 29 September, a unanimous decision and the fourth increase of 2026. Hauser has been among the RBA’s most consistent voices on inflation this year, previously describing it as the bank’s one big problem and pointing to the Middle East conflict, an artificial intelligence-driven global boom and weak supply capacity as drivers.

The next major test arrives on 28 October with the release of September-quarter inflation data, the last key input before the Board meets on 2 and 3 November. The decision is due at 2.30pm Sydney time on 3 November (03:30 GMT, 22:30 ET on 2 November). With Hauser signalling that the outlook has worsened and that expectations must stay anchored, a stronger-than-expected CPI print would likely strengthen the case for a fifth rate rise this year.

This article was written by Eamonn Sheridan at investinglive.com.

Source: Investing Live - Central Bank