RBA's Hauser Warns of Higher Interest Rates Amid Inflation Risks

The Reserve Bank of Australia's Deputy Governor Andrew Hauser warned that interest rates may need to be raised if inflation risks crystallise. Speaking at an event in Queensland, Hauser highlighted three upside risks to inflation: the Middle East conflict, the global AI boom, and poor productivity.

Hauser stated that if these risks materialize and inflation does not decrease, the RBA will have to increase interest rates again. The bank has already raised rates by 75 basis points since February to combat stubborn inflationary pressures, holding them steady at 4.35% last week.

The RBA has cautioned that further policy tightening cannot be ruled out, and markets imply a 60% chance of an additional increase to 4.6% by December, driven by rising oil prices amid the Middle East stalemate.