RBA Deputy Governor Andrew Hauser kept the door firmly open to further tightening on Tuesday, describing inflation as the economy’s “one big problem” and saying Australians were understandably “furious about inflation.” In an interview with ABC’s 7.30, Hauser said the Bank’s responsibility was straightforward: “What [people] want us to do is our job and bring inflation down.” He identified three forces keeping inflation elevated—the Middle East crisis, the global AI-driven investment boom and weak Australian supply capacity—and said the RBA “stand[s] ready” to raise rates again if needed.
The key policy question, Hauser said, is “have we done enough or is more needed?” He stressed that another hike is not inevitable, but also made clear the RBA could tighten much more aggressively if circumstances demanded it: “We could raise interest rates sharply [and] we could do it tomorrow.” The Board is not at that point because it still wants to protect employment and avoid an unnecessarily hard landing. Hauser said the economy is doing relatively well on unemployment and real household incomes, while the RBA is deliberately taking longer than some other central banks to return inflation to target in order to preserve labour-market gains.
That leaves the RBA with a clear tightening bias but no preset September decision. Hauser’s remarks reinforce the message from Assistant Governor Sarah Hunter earlier in the day: weaker demand is part of the adjustment the Bank wants to see, but it does not by itself remove the case for another hike if inflation remains too strong. His line that “when the facts change, we change our position” captures the current reaction function well. The RBA is prepared to tolerate cooling in housing and consumption, but the deciding issue remains whether incoming evidence shows inflation pressure easing sufficiently—or whether more is still needed.
Key Takeaways
- RBA Deputy Governor Andrew Hauser described inflation as Australia’s “one big problem” and said Australians were understandably “furious about inflation.”
- Hauser kept another rate hike clearly on the table, saying the RBA “stand[s] ready” to tighten again if needed.
- He framed the immediate policy question as “have we done enough or is more needed?”, making clear that further tightening is possible but not predetermined.
- The RBA is not yet prepared to pursue a much more aggressive anti-inflation strategy that would place far less weight on full employment. Hauser said it “could raise interest rates sharply” but is not at that point.
- He identified three main inflation pressures: the Middle East crisis, the global AI-driven boom, and weak domestic supply capacity.
- Weakening housing, consumer sentiment and business conditions do not automatically imply the RBA should stop tightening. The key question is whether the cooling already underway is sufficient to bring inflation back down.
