RBA Signals Possible Rate Hikes Amid Persistent Inflation Pressure

The Reserve Bank of Australia (RBA) is prioritizing its fight against inflation and may raise interest rates further to tame it, according to Assistant Governor Sarah Hunter.

Hunter emphasized that elevated inflation remains a major concern for the central bank's board, despite slowing headline inflation from around 5% year-on-year in mid-2026 to approximately 4%. However, underlying inflation remains near 3.6%, still above the RBA's target band of 2-3%.

The RBA held its cash rate at 4.35% following its August 2026 meeting, with no immediate changes in sight. The central bank's own projections indicate that inflation is unlikely to return to the target midpoint until early 2028.