RBA’s Hauser: Inflation Still ‘Far Too High,’ More Work Required

The Reserve Bank of Australia (RBA) still has significant work to do to bring inflation down, according to Deputy Governor Andrew Hauser, who described current price pressures as “far too high” for comfort. Speaking at a conference in Sydney on Wednesday, Hauser reinforced the central bank’s cautious stance, signaling that monetary policy will remain restrictive until there is clear and sustained evidence that inflation is returning to the target band.

Hauser’s Cautious Message on Inflation

Hauser’s remarks come as Australia’s headline inflation rate has moderated from its peak of around 7.8% in late 2022 to approximately 3.6% in the latest quarterly data. However, the RBA’s preferred measure of underlying inflation — the trimmed mean — remains above 4%, well outside the central bank’s 2-3% target range. “We have made progress, but the job is not done,” Hauser said. “Inflation is still far too high, and we cannot afford to become complacent.”

The deputy governor emphasized that the RBA is closely monitoring services inflation, which has proven stickier than goods inflation. “Demand in the services sector remains elevated, and wages growth, while welcome for households, adds to cost pressures that feed into prices,” he explained. Hauser also noted that global factors, including geopolitical tensions and shipping disruptions, continue to pose upside risks to inflation.

Implications for Interest Rates and Households

Hauser’s comments suggest that the RBA is unlikely to cut interest rates in the near term, despite growing pressure from some quarters for relief. The cash rate has been held at 4.35% since November 2023, following a series of aggressive hikes. Markets had been pricing in a potential rate cut in late 2024, but Hauser’s speech has tempered those expectations.

For Australian households, this means mortgage repayments are likely to remain elevated for longer. The RBA’s own analysis shows that around 30% of variable-rate borrowers are already experiencing negative cash flow, and a prolonged period of high rates could increase financial stress. However, Hauser argued that allowing inflation to persist would be more damaging in the long run. “High inflation erodes living standards and disproportionately hurts the most vulnerable,” he said.

What This Means for the Australian Dollar and Markets

The Australian dollar strengthened modestly following Hauser’s remarks, as traders adjusted their rate expectations. Bond yields also edged higher. Analysts at Commonwealth Bank noted that the RBA’s hawkish tone reinforces their view that the next move in rates is more likely to be a hike than a cut, though they acknowledge the risk of a prolonged pause.

Conclusion

Deputy Governor Hauser’s latest assessment underscores the RBA’s determination to see the inflation battle through, even as the economic outlook becomes more uncertain. With underlying inflation still above target and services costs proving stubborn, the central bank is signaling that patience — not premature easing — is the order of the day. For households and businesses, the message is clear: the path back to price stability will take longer than many had hoped.

FAQs

Q1: What did RBA Deputy Governor Hauser say about inflation?
He stated that inflation remains “far too high” and that the RBA still has significant work to do to bring it back to the 2-3% target range.

Q2: Will the RBA cut interest rates soon?
Based on Hauser’s comments, a rate cut in the near term appears unlikely. The RBA is maintaining a cautious stance until inflation shows sustained improvement.

Q3: How does this affect Australian households?
Mortgage repayments are likely to stay elevated for longer, increasing financial pressure on variable-rate borrowers. The RBA warns that allowing inflation to persist would be worse for living standards in the long term.