Key facts
- Odds of a fifth RBA interest rate hike on November 3 increased to 45%.
- Inflation in the year to August was 4%, well above the RBA's 2.5% target.
- Unemployment reached a five-year high of 4.7%.
The likelihood of a fifth interest rate hike by the Reserve Bank of Australia on November 3 has increased following comments from Deputy Governor Andrew Hauser. He warned that the inflation outlook is "materially worse" and that the central bank faces "hard choices" to prevent entrenched inflation expectations.
Hauser stated that persistent high inflation, exacerbated by global supply shocks like rising oil prices, necessitates difficult decisions. He acknowledged the public's concern about rising rates amid these external pressures, emphasizing the RBA's role in preventing supply shocks from fueling second-round inflation effects.
While the economy shows signs of slowing, with unemployment reaching a five-year high of 4.7%, Hauser pointed to mixed signals including strong growth in Asian trading partners and a boom in datacentre investment. The RBA must weigh the need to tackle inflation against the risk of further weakening economic activity and the labor market.