RBA Warns of More Rate Pain Amid Inflation Risks

RBA Deputy Governor Andrew Hauser warned that interest rates may need to rise again if inflation risks crystallize. The central bank left interest rates on hold for the second straight meeting last week, but Governor Michele Bullock hinted it could still hike rates.

The main upside risk to inflation is the Middle East conflict, which is pushing up energy prices. Hauser also mentioned the global artificial intelligence boom and poor productivity as contributing factors.

Hauser said that if interest rates were increased by another 0.25%, they would reach 4.6%, a level not seen since late 2011. He emphasized that the central bank is forecasting a slowdown, not a recession.