Australia's central bank says inflation looks worse, a November hike is in play

What Hauser said. According to ABC, he sees early signs that some people doubt inflation will come back to target at all. The RBA target is 2-3% on average. Inflation was 4% in August. Business surveys show more firms treating 3-3.5% as normal. Hauser called that the central banker's nightmare and said expectations cannot be allowed to drift from target.

Why it matters. Inflation expectations work like a self-fulfilling forecast. If companies are sure prices will rise 3.5% a year, they build that into their prices and wages in advance. That is why central banks watch them so closely.

There are arguments against a hike too. Unemployment unexpectedly hit 4.7% in September, a five-year high, and house prices are falling faster than the bank expected. Hauser admitted the job market eased a little more than expected, but stressed the word little. He said the economy needs to cool, and how high unemployment may go is part of the bank's forecast debate now.

What comes next. Reuters says investors fully price a hike by March and that quarterly data could show inflation rising to 4%. A UBS economist expects a November hike but says the board vote could be split.

Confirmed facts

• On 21 October RBA deputy governor Andrew Hauser took part in a fireside chat at Citi's investment conference in Sydney.^[1][2][3]
• Hauser said the inflation outlook looks materially worse, partly because of high oil prices.^[2][3]
• The RBA cash rate is 4.60% after four hikes this year; the next decision is on 3 November.^[3]
• Odds of a November hike: 51% on Bloomberg data (ABC), about 40% per Reuters.^[2][3]
• The RBA targets 2-3% inflation; inflation was 4% in August.^[2]
• Unemployment rose to 4.7% in September, a five-year high.^[2][3]
• The RBA publishes new forecasts on 3 November together with its rate decision.^[2]

Implications

• ConfirmedMarkets raised the odds of a November rate hike after Hauser spoke.
• Our readingA hike could support the Australian dollar and make mortgages in Australia more expensive.
• Our readingExpensive oil makes it harder for central banks everywhere to cut rates.

Still unknown

• What third-quarter inflation data will show.
• How the RBA board will vote on 3 November.
• How long high oil prices will last.

Who it affects

Australia. Anyone watching the Australian dollar, interest rates and currency pairs

Sources

1. Reserve Bank of Australia: Fireside chat by Andrew Hauser, Deputy Governor at Citi's Australia & New Zealand Investment Conference, Sydney October 21, 2026 · official
2. ABC News: RBA deputy warns inflation outlook 'materially worse' ahead of November meeting October 21, 2026 · media
3. Reuters: Australian central banker says policy working, but inflation outlook worse October 21, 2026 · media