RBA deputy warns inflation outlook worse, raising odds of fifth rate hike
RBA deputy Andrew Hauser said inflation outlook is worse, raising odds of a rate hike to 45%.
Key facts
- According to ABC News, Andrew Hauser warned that the inflation outlook is materially worse.
- The RBA targets headline inflation between 2% and 3% on average.
- Market pricing puts the chance of a November rate hike at 45%.
- Inflation sits at 4% according to the August consumer price index.
- Unemployment rose to 4.7% in September.
- The RBA will release its quarterly forecasts on November 3.
According to ABC News, Andrew Hauser said the inflation outlook is materially worse than the RBA had forecast. He added that some people are unsure the bank can bring inflation back to target.
The RBA targets headline inflation between 2% and 3% on average. Inflation currently sits at 4% per the August CPI.
Market pricing now puts the chance of a November rate hike at 45%, according to The Guardian. The RBA will decide on the cash rate on Melbourne Cup day, 3 November.
Hauser said the RBA faces hard choices, balancing risks of entrenched inflation with the need to protect the labour market. He noted that businesses are seeing 3.5% inflation as the new normal.
The RBA will release its quarterly forecasts on November 3, the same day the interest‑rate‑setting board hands down a decision.
Hauser said the central bank is laying short‑term pain on top of pain to prevent higher inflation expectations from locking in.
Context
Inflation is currently 4% according to the August consumer price index. The RBA targets headline inflation between 2% and 3% on average. The RBA's cash rate target is 4.6% and could rise to 4.85% if a rate hike occurs.
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