What happened
Reserve Bank of Australia Deputy Governor Andrew Hauser warned that the domestic inflation outlook has deteriorated materially against previous central bank forecasts. Speaking at the Citi Investment Conference, he highlighted concerns that businesses and consumers are beginning to accept higher price growth as normal, raising market expectations of a November interest rate increase to over 50 per cent.
Why it matters here
Elevated inflation of 4 per cent threatens to entrench higher borrowing costs across the economy. A potential Melbourne Cup day cash rate hike would increase mortgage stress, lift corporate debt servicing costs, and weigh on growth-sensitive equity sectors on the ASX.
What to watch
Monitor the upcoming September-quarter Consumer Price Index data release and the Reserve Bank of Australia board meeting on Melbourne Cup day to gauge monetary policy direction.
Source
abc.net.au