RBA Deputy Governor Hauser Flags Worsening Inflation Outlook, Boosting Australian Dollar
| Pair | Now | Since publish |
|---|---|---|
| AUDUSD | — | — |
- RBA’s Hauser flags worsening inflation, Q3 CPI hotter.
- Market prices ~50:50 RBA hike for November, high year-end odds.
- Hike bets boost AUD/USD to highest since late September.
- Commerzbank expects RBA on hold, despite hawkish sentiment.
Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser stated that Australia’s inflation outlook appears materially worse than previously forecast, with the Q3 trimmed mean component of the Consumer Price Index (CPI) expected to run hotter than anticipated. Speaking ahead of the October 28 CPI release, Hauser’s remarks highlighted persistent domestic pressures, alongside higher oil and technology prices, despite acknowledging some easing in labor and housing data. These comments have reinforced market expectations for a potential rate hike at the RBA’s November 3 meeting. In response, the Australian Dollar (AUD) registered solid gains against the US Dollar (USD), climbing above 0.7000 to a two-week high of 0.7017, as investors priced in increased tightening prospects.
Following recent hawkish comments, market participants are now pricing a close to 50:50 chance of an RBA rate hike next month and a high probability of a hike by year-end. Analysts from MUFG, including Lee Hardman, and Commerzbank, including Norman Liebke, note that these rising rate hike expectations are supporting the Australian Dollar, with AUD/USD reaching its highest level since late September. Commerzbank economists, however, anticipate the RBA will remain on hold.