What happened
Reserve Bank Deputy Governor Andrew Hauser warned that the inflation outlook is materially worse than expected, raising fears high prices are becoming entrenched. Speaking in Sydney, he noted an increasing share of businesses expect 3 to 3.5 per cent inflation as the new normal. Following his comments, financial markets lifted the probability of a November interest rate increase to more than 50 per cent.
Why it matters here
For Australian investors, a potential fifth rate hike this year to 4.85 per cent would increase borrowing costs and place renewed pressure on consumer spending and rate-sensitive equities. Higher cash rates also impact mortgage holders and valuation multiples across domestic equity portfolios, reinforcing the need to prepare for sticky inflation and tight monetary policy through late 2026.
What to watch
The Reserve Bank Board monetary policy meeting and cash rate decision on Melbourne Cup Day, 3 November 2026, along with upcoming flash PMI data and inflation updates.
Source
abc.net.au