RBA’s Hauser Pledges Action on Inflation; AUD Soars

The Reserve Bank of Australia (RBA) Deputy Governor, Andrew Hauser, recently addressed the ongoing challenges of inflation during a fireside chat at the Australian Chamber of Commerce and Industry (ACCI) Business Leaders’ Series held in Sydney. His comments highlighted a firm commitment to controlling inflation as it remains above the desired levels.

Hauser’s Commitment to Tackling Inflation

Hauser reaffirmed that inflation continues to be too high and signalled the RBA’s readiness to take further measures if necessary. The RBA aims to maintain inflation within the target range of 2% to 3%. He recognized that although some inflationary pressures may decrease naturally due to previous global supply chain issues, others may persist due to local supply constraints.

Economic Resilience Beyond the Resources Sector

In his address, Hauser emphasized that Australia’s economy is not solely reliant on the resources sector. He pointed out that economic activity throughout various sectors remains strong. This resilience suggests that domestic demand has been better than anticipated, despite the impacts of higher interest rates.

Recent Monetary Policy Developments

• The RBA recently increased the cash rate to 3.85%.
• This rise was attributed to renewed inflation risks and ongoing capacity pressures in the economy.
• Future rate increases are being considered, with May being a probable timeframe.
• A March increase is also possible but would depend on unexpected inflation or wage data surges.

Hauser’s statements align with the RBA’s ongoing strategy to anchor inflation expectations and prevent it from becoming entrenched. Market responses indicate an expectation for tighter monetary policy in the near future, illustrating the central bank’s vigilance in combating inflation.

Conclusion

As inflation remains a pressing concern, the RBA is prepared to enact further policy adjustments to bring inflation back to target levels. Hauser’s remarks emphasize the central bank’s determination to maintain economic stability while addressing the unique challenges faced by Australia’s economy.