What happened
RBA Deputy Governor Andrew Hauser warned at a Sydney conference that Australia's inflation outlook has deteriorated beyond previous forecasts. Headline inflation remains at 4%, and an increasing number of businesses view 3.5% inflation as normal. Consequently, financial market pricing for an official cash rate hike at the upcoming November meeting surged past 50%.
Why it matters here
With the cash rate currently at 4.60%, another 25 basis point hike would push official borrowing costs to 4.85%, their highest level since the global financial crisis. Higher rates increase debt servicing costs for Australian households, weigh on consumer spending, and compress valuations for high-multiple growth equities while supporting variable bank interest income.
What to watch
The RBA Board decision on Melbourne Cup Day, 3 November 2026, alongside updated staff economic forecasts and the upcoming quarterly inflation data to confirm whether policy tightens further.
Source
abc.net.au