What happened
Reserve Bank Deputy Governor Andrew Hauser warned at a Sydney conference that the inflation outlook is materially worse than previously forecast. With August headline inflation at 4 per cent, Hauser expressed concern that businesses and consumers are accepting 3.5 per cent inflation as a new normal, creating a central banker nightmare that may require monetary policy tightening.
Why it matters here
A fifth rate hike this year would lift the cash rate target to 4.85 per cent, its highest level since the global financial crisis. Rising borrowing costs place immediate upward pressure on debt-servicing expenses for households and corporate borrowers, while compressing valuation multiples for equities, particularly interest-rate-sensitive growth and technology sectors.
What to watch
Watch for the upcoming September quarter CPI release to gauge underlying price pressures before the RBA convenes its Monetary Policy Board meeting and rate decision on 3 November 2026.
Source
abc.net.au