RBA Deputy Governor Andrew Hauser signaled that policymakers face a difficult decision at next week’s board meeting, warning that the recent surge in oil prices is adding new uncertainty to the inflation outlook. Speaking in an interview with The Conversation, Hauser said there will be “a lot for the board to discuss” when it meets later this month.
Hauser emphasized that a “very genuine debate” is likely among board members as they weigh competing risks. While inflation remains too high and rising energy prices could push it higher, policymakers must also consider broader economic conditions. “Inflation is too high. Higher prices don’t help that debate,” Hauser said, adding that arguments exist on both sides of the policy discussion.
The RBA’s current projections already point to headline inflation reaching 4.2% by June, but Hauser acknowledged that the recent oil spike linked to the Middle East conflict could push inflation above that forecast. However, he downplayed the likelihood of inflation climbing as high as 5% in the near term, noting that such projections assume oil prices remain around the USD 100 level.
Hauser stressed that the central bank has not yet updated its formal forecasts and will only revise them in May, after the upcoming policy meeting. For now, the key takeaway is that inflation risks are clearly tilted to the upside.
