Hauser warns Australia's inflation outlook has deteriorated with rates at 4.60%
Key Facts
Reserve Bank of Australia Deputy Governor Andrew Hauser said the inflation outlook had deteriorated despite tighter monetary policy succeeding in slowing the economy, after the cash rate target was raised to 4.60% in September. Reuters quoted him as saying that "the inflation outlook has continued to deteriorate", an assessment combining persistent price pressures with slowing activity under tighter monetary policy. Hauser said the bank's economists were finalising their economic forecasts ahead of the Monetary Policy Board's next meeting. But he said he did not know for certain what the board would decide at that meeting. The bank approved a 25 basis point increase in the cash rate target in its September decision. The increase was unanimously supported by board members, according to the decision statement published by the Australian central bank.
Australian Bureau of Statistics data showed the consumer price index rose at an annual rate of 4.0% in August 2026, as headline price growth accelerated. The index's annual increase was 3.5% in July, according to the comparison provided by the bureau in its consumer prices release. Annual trimmed mean inflation was 3.6% over the months ending in August, according to the same official release. In its September decision statement, the central bank said global energy prices had become significantly higher, as part of its assessment of the pressures facing the economy. The bank affirmed its readiness to take further tightening measures when necessary, including "raising the cash rate target again if needed", according to the statement.
On domestic pressures, bank board members discussed at their September meeting the possibility that the economy's capacity was lower than they had assumed, according to the published meeting minutes. The minutes linked rising unit labour costs to weak productivity growth in the Australian economy in explaining the source of pressure on those costs. They said the increase was driven by weak productivity performance rather than exceptionally strong nominal wage growth. On credit, the September decision statement noted a marked decline in new housing loans as tight monetary policy continued. Governor Michele Bullock said at the accompanying press conference that "the full impact of interest rates may take 12 months, and perhaps even 18 months in some areas".
In the labour market, the number of people employed in Australia fell by 39,300 in September 2026, according to seasonally adjusted data published by the Australian Bureau of Statistics. While total employment declined, the number of full-time workers rose by 34,400 in the same month, according to details in the labour force report. The seasonally adjusted unemployment rate stood at 4.7% in September, according to the bureau's reading in the report. That represented a monthly increase of 0.1 percentage point, alongside the decline in total employment over the same period. The labour force participation rate also fell by 0.2 percentage point to 66.8% in September on a seasonally adjusted basis, according to the bureau.
In trading on Thursday, 15 October 2026, the Australian dollar fell after the employment report was released, according to Investing.com's coverage of the currency's moves. It declined by 0.3% during that trading session, according to the website, which linked its coverage to the release of Australian labour market data. The exchange rate reached 0.6951 U.S. dollars per Australian dollar in trading following Thursday's report. In the bond market, the September meeting minutes had recorded a marked rise in Australian government bond yields as part of the board's review of financial conditions. The minutes attributed the increase in those bond yields to higher real yields, according to the central bank's assessment in its meeting minutes.
The next milestones begin with the Australian Bureau of Statistics' release of its consumer prices report covering price developments in September 2026, according to the bureau's official publication schedule. The bureau scheduled the report for 28 October 2026, ahead of the Reserve Bank of Australia's next monetary policy meeting. The report will be released at 11:30 a.m. Australian Eastern Daylight Time, according to the time listed in the consumer prices schedule. The central bank will then announce its next monetary policy decision on 3 November 2026, according to its official calendar of meetings and releases. The bank set the announcement time at 2:30 p.m. Australian Eastern Daylight Time. The Statement on Monetary Policy will also be released on the same day and at the same time, according to the schedule published on the bank's website.