Reserve Bank of Australia Deputy Governor Andrew Hauser has reiterated that inflation remains too high and that monetary policy needs to keep reducing demand in the economy to bring it back toward target, warning that further rate hikes remain on the table if inflation fails to come down.

Key points from Hauser:

• Inflation is too high
• Monetary policy needs to bring inflation down and needs to reduce demand in the economy
• Not seeing a recession, just a slowdown
• Worried about inflation and the upside risks to inflation
• If inflation doesn't come down, will have to raise rates again

Hauser said the Board is not forecasting a recession, characterising the current path as a slowdown rather than a sharper downturn, but flagged that upside risks to inflation remain a genuine concern.

The comments extend a message he has delivered consistently through 2026: the RBA's three rate hikes earlier this year, which took the cash rate to 4.35 percent, reflected a judgment that demand was outstripping the economy's supply capacity by more than initially expected, and that acting early limits the eventual cost to unemployment. The stance carries direct weight for Australian borrowers, most of whom hold variable-rate mortgages that reprice with the cash rate, making the level of rates a live question for household budgets rather than an abstract debate.

The remarks land against a backdrop in which the Board has now held rates steady for two consecutive meetings. Headline inflation is running around 3.8 percent — still above the 2–3 percent target band the RBA aims for over the medium term — while trimmed mean measures, the Bank's preferred gauge of underlying inflation because they strip out the largest price moves, have proved sticky rather than falling cleanly. Governor Bullock has separately noted that current market pricing for near-term rate cuts runs ahead of the Board's own thinking.

Wednesday's wage data adds a further complication. Private sector wage growth has continued to moderate to its slowest pace this cycle, but the Fair Work Commission's larger-than-expected 4.75 percent award wage increase — the product of its annual review setting minimum and award pay — lands in the third quarter and is expected to push wage growth back up.

Layered on top of the domestic picture is the external inflation risk from elevated oil prices tied to the ongoing Iran conflict and Strait of Hormuz disruption — a factor both Hauser and Bullock have cited as complicating the RBA's task alongside already-excess domestic demand. Australia imports the bulk of its fuel, so global oil price movements pass through to local petrol prices and, with them, headline inflation.

Hauser's explicit warning that rates could rise again if inflation doesn't ease keeps the Board's tightening bias technically alive, signalling that the current pause remains conditional rather than a shift toward an easing cycle. The condition will be tested by the same forces threaded through this week's data and commentary: whether trimmed mean inflation resumes falling in coming quarterly CPI readings, how the 4.75 percent award increase shows up in third-quarter wage data, and where oil prices and Strait of Hormuz shipping head next.

Source: ForexLive | Related: Hauser appearance preview