Reserve Bank of Australia deputy governor Andrew Hauser says inflation remains the biggest problem facing the Australian economy, as the central bank weighs whether further interest rate increases may be needed.
Speaking to ABC’s 7.30, Hauser acknowledged growing frustration among Australians dealing with higher prices and said the RBA remained focused on bringing inflation back under control.
“People are furious about inflation,” Hauser said, adding that it affects people on lower incomes, distorts price signals and makes it harder for businesses to operate. He said Australians want the central bank to do its job and bring inflation down.
Hauser said the Australian economy was performing well on some measures, including employment and real household incomes, but consumer confidence remained weak. He linked much of the public frustration to the lasting effect of higher prices following the post-COVID inflation surge.
The deputy governor identified three risks that could keep inflation higher than expected: the continuing conflict in the Middle East, an unexpected global investment boom driven by artificial intelligence, and weaknesses in Australia’s ability to expand supply.
Hauser said another rate increase was not inevitable, but made clear the RBA was prepared to act again if inflation pressures required it. The central bank has already raised interest rates three times this year.
The RBA board is due to meet later in September to decide whether to raise or hold the cash rate. The cash rate is currently 4.35 per cent, while new inflation data is due after that meeting.
Hauser also said the RBA was watching the housing market and expected house prices to fall a little further, although he said housing conditions were not among the biggest factors driving the bank’s current forecasts.
The RBA’s longer-term challenge is to reduce inflation while protecting employment gains. Hauser said the bank had deliberately taken a slower approach to avoid unnecessarily damaging jobs, but acknowledged that inflation remaining above target for an extended period could weaken public confidence in the inflation target.
Source: ABC News · Reserve Bank of Australia
