Published Wed, Aug 19, 2026 · 12:26 PM
[SYDNEY] Australia’s central bank will have to raise interest rates again if upside risks to inflation crystallise, a top official said on Wednesday (Aug 19), reiterating a hawkish warning after policymakers held rates steady for a second meeting.
Speaking at an event in Queensland, Reserve Bank of Australia Deputy Governor Andrew Hauser laid out three upside risks to inflation on his mind – the Middle East conflict, the global AI boom and poor productivity.
“If those upside risks to inflation crystallise and we don’t see inflation coming down, we will have to raise interest rates again and we will do so.”
The RBA held interest rates steady at 4.35 per cent last week, having already hiked by 75 basis points since February to restrain stubborn inflationary pressures. It has warned further policy tightening cannot be ruled out.
As a result, the economy has slowed, inflation readings have come in lower than expected and the housing market has weakened by more than the central bank expected.
Markets imply around a 60 per cent chance of a further increase to 4.6 per cent by December as oil prices climbed to three-week highs amid the stalemate in the Middle East, though investors assume that will likely mark the end of the tightening cycle.
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Hauser added that the central bank has seen a bit of a slowdown in consumption and employment growth, but needs to see more still.
“That is not a slump. It is not a depression… but it’s a lot slower than Australia has known in the past and it’s a lot slower than recently.” REUTERS
