RBA Deputy Flags Worsening Inflation, Odds of Fifth Rate Hike Tighten

Deputy Governor Andrew Hauser warned that the inflation outlook is moving into a “worsening” zone, a signal that the Reserve Bank of Australia may have less room to keep rate hikes on a leisurely schedule.

In response, market participants saw the odds of a fifth rate hike this year tighten, meaning the next move could come sooner rather than later.

Hauser also reminded the market that the central bank faces “hard choices” as it tries to balance the risk of entrenched inflation with the desire to protect the labour market.

The combination of a worsening inflation outlook and a shortened window for a fifth hike has turned what was a steady ride into a more jittery one for borrowers and investors alike, who now have to keep an eye on the RBA’s next signal.