RBA Keeps Hike Option Open Amid Inflation Risks

The Reserve Bank of Australia (RBA) has flagged inflation risks and kept its option to hike interest rates open. Deputy Governor Andrew Hauser warned that if upside risks to inflation materialize, the RBA will need to raise interest rates again.

In a speech on Wednesday, Hauser highlighted three key risks: the Middle East conflict, the global AI boom, and weak productivity. These factors could contribute to higher prices and require further monetary tightening.

The RBA has already lifted its cash rate by 75 basis points since the start of the year to curb stubborn price pressures. However, it held steady at 4.35% for a second consecutive meeting last week.

Hausser's remarks underscore the Bank's readiness to act further should these risks intensify. The central bank has made it clear that its policy remains firmly focused on restraining inflation.