Hauser flags 'three-headed monster' inflation risk as RBA weighs another hike this month

Even without declaring a September increase certain, Hauser's remarks on Tuesday evening left one firmly in play across Australia's rates, currency and equity markets. The Australian dollar is the clearest market signal, since a more obvious tightening bias tends to support the currency against major peers. Australian Commonwealth Government Bond yields, especially at the shorter end, could also move up as market pricing builds in a higher probability of action this month. If traders lean more strongly into a hike scenario, the ASX could come under pressure, especially in rate-sensitive areas such as banks, real estate investment trusts and consumer discretionary stocks, since elevated borrowing costs tend to drag on those valuations. Given the RBA's cash rate stands at 4.35 percent following three increases earlier this year, and given the four major banks project another quarter-point rise to 4.6 percent by year end, traders will probably view Hauser's comments as confirming an active tightening bias rather than as fresh news. The remarks on Tuesday echoed what Assistant Governor Sarah Hunter had said earlier that day, strengthening a single tightening narrative from RBA leadership before the September board meeting. With the next inflation data not due until September 30, the day after that meeting, bond and equity markets have little new information to rely on in the meantime, making Hauser's language among the clearest signals they have.

Summary

• On ABC's 7.30 program Tuesday evening, RBA Deputy Governor Andrew Hauser described inflation as the central bank's "one big problem" and acknowledged public anger over the cost of living.
• He blamed persistent inflation on a three-headed monster: the Middle East crisis, an AI-driven global boom, and weak domestic supply capacity.
• Hauser strongly hinted the RBA is weighing a rate rise this month, but stopped short of calling it inevitable, saying the question is whether enough has already been done.
• The RBA increased rates three times in early 2026, taking the cash rate to the current 4.35 percent, while the four major banks expect a further quarter-point rise to 4.6 percent by year end.
• The board meets at the end of September, and fresh inflation figures arrive only the day after the decision, on September 30.
• Hauser's Tuesday evening comments came after Assistant Governor Sarah Hunter said hours earlier that day that the RBA may need to raise rates further if inflation runs hotter than forecast.

Reserve Bank of Australia Deputy Governor Andrew Hauser has delivered one of the strongest indications so far that the central bank is mulling another rate increase this month, telling ABC's 7.30 program on Tuesday evening, Australia time, that inflation is still the RBA's central worry while the wider economy remains reasonably sturdy. Hauser recognised broad public anger about living costs, arguing inflation is unfair because it falls hardest on lower income households and makes business decisions harder, adding: "People are furious about inflation."

The persistent price pressure, Hauser said, came from what he called a three-headed monster: the continuing Middle East crisis, a surprisingly robust global investment boom powered by AI, and supply-side constraints in Australia. He indicated the RBA could lift rates aggressively if it decided to put inflation ahead of its full employment goal, but said Australia had not reached that stage. Asked directly whether a rise this month was unavoidable, he avoided an outright answer, describing the board's decision as an open question of whether enough tightening has already been done.

Three cash-rate increases in early 2026 brought the RBA's benchmark to 4.35 percent, after policymakers concluded that demand was exceeding supply capacity by more than anticipated. The country's four major banks expect one more quarter-point rise, to 4.6 percent, by year end. The board's next meeting comes at the end of September, but the closely watched quarterly inflation report is not scheduled until September 30, one day later, so officials must decide with only a partial data picture.

Assistant Governor Sarah Hunter had made similar remarks earlier that same day, saying the RBA may well need to raise rates again if it decides inflation is running above its forecast path, reinforcing the leadership's consistent message before the meeting. Hauser also addressed housing, saying he anticipates prices declining a bit more but that the property downturn does not significantly drive the bank's wider forecasts. He reflected on a recent visit to the US that heightened his concern about global inflation risks, citing the scale of AI-related investment he saw there while expressing doubt about whether current valuations in that sector are realistic. Overall, the signals portray a central bank willing to keep tightening if necessary, yet still deliberating on Tuesday evening rather than treating a September move as a done deal.

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2026 Reserve Bank of Australia meetings: