FX.co ★ RBA Flags Inflation Risks, Keeps Hike Option Open

The Reserve Bank of Australia (RBA) will need to raise interest rates again if upside risks to inflation materialize, Deputy Governor Andrew Hauser warned in a speech on Wednesday. He said inflation remains “too high” and identified three key sources of risk: the conflict in the Middle East, the global boom in artificial intelligence, and persistently weak productivity.

The central bank has already increased interest rates by 75 basis points since the start of the year in an effort to rein in stubborn price pressures, but left the cash rate unchanged at 4.35% for a second consecutive meeting last week. Hauser’s comments underscore the RBA’s readiness to tighten policy further if these risks intensify, reaffirming its focus on bringing inflation under control.