What happened
Reserve Bank of Australia Deputy Governor Andrew Hauser warned that the central bank will raise interest rates again if upside inflation risks materialise. Hauser highlighted three primary risks: the Middle East conflict, the global artificial intelligence boom, and poor domestic productivity. The RBA held its cash rate steady at 4.35 per cent following 75 basis points of hikes since February.
Why it matters here
While markets had priced in an end to the tightening cycle, Hauser emphasized that consumption and employment growth must slow further to bring inflation to target. For local investors, lingering rate hike risks threaten valuations in interest-rate-sensitive sectors such as real estate investment trusts and retail, while keeping mortgage costs high for leveraged property owners.
What to watch
Money markets currently imply a 60 per cent probability of an RBA rate increase to 4.60 per cent by December 2026 as oil price trends remain volatile.
Source
reuters.com