Economists warn the Reserve Bank of Australia may raise interest rates again after a key inflation figure due on Wednesday. Market pricing has risen to more than a 60 per cent chance of a rate hike on Melbourne Cup day. Deputy governor Andrew Hauser said inflation looked materially worse than the central bank had projected in August. Treasurer Jim Chalmers said Australia is faring better than much of the developed world, though inflation remains a domestic challenge. RBA chief economist Sarah Hunter said the bank must control inflation for the benefit of everyone.
Economists at Citi expect underlying inflation to rise about one per cent in the September quarter, above the Reserve Bank's August forecast. They say the data may matter less than comments from deputy governor Andrew Hauser, which suggested a rate rise is likely. Market pricing for a November increase rose above 50 per cent after his remarks. NAB still expects the cash rate to hold at 4.6 per cent, forecasting inflation to return to target as fuel cost pressures fade.
Reserve Bank of Australia deputy governor Andrew Hauser has warned of a worsening inflation outlook and left open the possibility of another interest rate hike in November. He said the bank faces hard choices, weighing higher inflation against a weaker labour market. Hauser said some businesses now regard inflation of around 3.5% as the new normal, which he called a central banker's nightmare. Third-quarter inflation data, due on October 28, is expected to play a decisive role in the decision. Markets are now pricing in a 51% chance of a November rate hike, up from below 20% last week.
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The Reserve Bank of Australia has warned it faces difficult decisions before its November meeting, with a possible rate rise that would be the fifth this year. Deputy Governor Andrew Hauser said the bank must weigh controlling inflation against economic pain for households and businesses. Fault Lake Asset Management founder Christian Bayliss said inflation has averaged 4.5 per cent a year since mid-2021, against a target of 2.5 per cent. He estimated this costs each household about $14,000 a year and said there was an even chance of another rise.
Australian shares rose on Wednesday, shrugging off hawkish comments from a Reserve Bank official. The benchmark S&P/ASX200 index gained 0.16 per cent to finish at 8831.3, while the All Ordinaries rose 0.14 per cent. Earlier in the day, deputy governor Andrew Hauser told a Sydney investment conference that inflation was materially worse than the central bank had forecast. He said businesses were starting to view 3.5 per cent inflation as the new normal. The Australian dollar climbed to a three-week high after his remarks.
Homeowners are watching next week's inflation data closely, as it could decide whether the Reserve Bank lifts interest rates again. Economist David Koch said a higher than expected figure would likely prompt a rate rise, while a result at or below 3.6 per cent may bring a short reprieve. Mortgage holders with an average loan of about $731,000 already pay $464 more each month after four rate hikes this year. Loan lodgements to buy homes fell 24 per cent from January, with investor lodgements dropping 44 per cent nationally.
Reserve Bank deputy governor Andrew Hauser says the board faces hard choices over whether to raise interest rates further. He spoke at a Citi bank conference in Sydney and said a November rate rise remains possible. Hauser said inflation expectations were becoming embedded as Middle East supply shocks continued, which he called a central banker's nightmare. Traders have raised their expectations of a November hike after softer jobs figures. Inflation data for the September quarter, due on October 28, will be pivotal to the decision.
Reserve Bank deputy governor Andrew Hauser has warned the bank faces hard choices and that inflation risks have escalated since its August forecasts. Oil prices are about a third higher than the bank assumed in August, he said. Underlying inflation stood at 3.6 per cent in the 12 months to August, the fourth month in a row without easing. Mr Hauser said some people are unsure inflation will return to target, which he called a central banker's nightmare. The bank's board meets from 2 to 3 November, with a rate decision to follow.
Reserve Bank deputy governor Andrew Hauser says the inflation outlook is materially worse than the RBA had forecast. He warned that high inflation is becoming entrenched and that some businesses now see 3 to 3.5 per cent as the new normal. Inflation currently sits at 4 per cent, above the RBA's 2 to 3 per cent target. Market pricing gives a 51 per cent chance of a rate hike at the November 3 meeting. Mr Hauser said the labour market needed to soften, while the unemployment rate reached 4.7 per cent in September.
Reserve Bank deputy governor Andrew Hauser has hinted at further interest rate rises, saying the bank faces hard choices. Speaking at the Citi Investment Conference 2026, he said inflation is running higher than the bank expected in August, with headline inflation at 4.0 per cent. Hauser said the bank must weigh tackling inflation against a weakening jobs market, where unemployment rose to 4.7 per cent. He also said renters and low-income households feel the pain of higher inflation most, and that the bank cannot stand in the way of rising oil prices.
Financial market odds of a fifth interest rate rise this year rose from 30 per cent to 45 per cent after Reserve Bank deputy governor Andrew Hauser warned of hard choices. Hauser said inflation had been high for a long time and some people were doubting it would return to target. Inflation reached 4 per cent in the year to August, and Hauser said 3.5 per cent was becoming the new normal for businesses. AMP economist Diana Mousina said a November hike was not a foregone conclusion, pointing to a weakening jobs market.
Shares in data centre operator NextDC fell more than 40 per cent on Wednesday after returning to trade following a suspension. The ASX200 still finished the day in positive territory. Reserve Bank deputy Andrew Hauser said the central bank faces tough choices, as a growing share of businesses think higher inflation may be the new normal. This has raised expectations of a rate hike in November.
Reserve Bank of Australia Governor Michele Bullock will give the occasional address at a University of New England graduation ceremony in Armidale on Friday, 23 October. The ceremony begins at 10:30am in Lazenby Hall, moved indoors due to wet weather, and will be live streamed. Ms Bullock graduated from UNE in 1984 and was named the UNE Distinguished Alumni Award recipient in 2025. About 450 students will graduate over three ceremonies on 22 and 23 October.
An economist has warned that mortgage holders could face higher interest rates for decades as the Reserve Bank fights stubborn inflation. Warren Hogan of EQ Economics said the bank had lost patience and could raise rates again in November. The Reserve Bank has lifted the cash rate four times this year, to 4.60 per cent. Headline inflation rose to 4.0 per cent, above the bank's 2 to 3 per cent target. Commonwealth Bank's chief economist, Luke Yeaman, said further rate rises risked tipping the economy over the edge.
Around 462,000 Australian mortgage holders plan to refinance their home loan with a different lender within the next 12 months, according to Finder research. The plans come as the Reserve Bank raised the cash rate to 4.6 per cent in September, its fourth rate hike of 2026. Finder money and home loans expert Richard Whitten said borrowers were looking for ways to ease rising repayments. Finder figures show a 0.5 percentage point difference in interest rate on a $500,000, 30-year loan adds more than $58,000 over the loan's life.
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Unemployment rose to a five-year high of 4.7 per cent in September, above economist predictions of 4.6 per cent. Employment fell by almost 40,000, which was softer than expected. The data has raised the prospect that the Reserve Bank will hold interest rates steady at its next meeting on Melbourne Cup day. Bank officials are due to speak in coming days, and their comments will be watched closely. Last month the central bank lifted the official cash rate to 4.6 per cent, the highest level in 15 years.
