RBA Deputy Warns of Worsening Inflation, Boosting Rate Hike Odds

The likelihood of a fifth interest rate hike this year has increased following a stark warning from Reserve Bank of Australia Deputy Governor Andrew Hauser. He indicated that the central bank faces "hard choices" as it navigates a "materially worse" inflation outlook, balancing the risk of entrenched price pressures against the need to protect the labor market.

Hauser's comments, delivered at a Sydney conference, suggest that policymakers are increasingly concerned about public confidence in the RBA's ability to return inflation to its target range of 2.5%. The deputy governor's remarks have led to a reassessment of the probability of further monetary tightening, with markets now pricing in a higher chance of a rate increase on Melbourne Cup day.