Australian Dollar: RBA keeps hawkish bias on inflation – BNY

BNY’s Geoff Yu reports the Reserve Bank of Australia remains concerned about inflation, with Deputy Governor Andrew Hauser saying further rate hikes cannot be ruled out. Hauser cites external risks from Middle East-driven fuel costs and domestic capacity pressures, weak productivity and limited growth. He warns that if upside risks materialize and inflation does not keep falling, the RBA will raise rates again.

Hauser flags upside risks

"The Reserve Bank of Australia (RBA) is still concerned about the inflation outlook, and Deputy Governor Andrew Hauser said further rate increases cannot yet be ruled out."

"He said inflation remains too high, with pressures coming both from external shocks, including possible renewed Middle East-driven fuel cost spikes and domestic factors such as excessive pressure on capacity, weak productivity, and limited capacity growth."

"Hauser said the RBA remains worried about upside inflation risks even after leaving the cash rate unchanged at its meeting last week. He added that if those risks materialize and inflation doesn’t keep falling, the RBA will raise rates again."

"The comments reinforce the central bank’s hawkish bias despite recent policy restraint and suggest officials remain alert to both global and domestic inflation risks."

"Australia’s Wage Price Index for the June quarter 2026 rose 0.8% q/q for a fifth straight quarter, lifting annual wage growth to 3.2% y/y, unchanged vs. Q1 but down slight from 3.4% y/y in Q2 2025. Private-sector wages increased 0.7% q/q and 3.1% y/y (3.2% in March quarter 2026), while public-sector wages rose 0.9% q/q and 3.4% y/y."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)