Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser stated on Wednesday, August 19, 2026, that the central bank would be compelled to raise interest rates again if inflation fails to decline. Hauser emphasized that inflation remains excessively high and that monetary policy needs to reduce demand in the economy. He clarified that the RBA is not anticipating a recession, but rather a slowdown, and is particularly concerned about upside risks to inflation.
Hauser identified several key risks contributing to persistent inflation. These include the ongoing conflict in the Middle East, substantial investment in artificial intelligence infrastructure, and stagnant productivity growth within Australia. These factors, he noted, could prevent inflation from falling as desired.
Following Hauser's remarks, the Australian Dollar (AUD) experienced a marginal downtick. The AUD/USD pair traded 0.1% lower, hovering around $0.7078. The RBA's stance reinforces a hawkish bias, indicating their readiness to act if inflation targets are not met. The RBA's primary mandate is to maintain price stability, targeting an inflation rate of 2-3%, while also contributing to currency stability and employment. Historically, higher interest rates tend to strengthen the AUD by attracting foreign capital seeking better returns.
