RBA's Hauser to Speak After Week of Hawkish Inflation Warnings
0h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
rbaaustralian-dollar
Fazen Markets Editorial Desk
Collective editorial team · methodology
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Reserve Bank of Australia Deputy Governor Andrew Hauser will participate in a fireside chat on Australia's economic outlook in Sydney on June 5, 2026. The event, scheduled for 2:30 PM local time (04:30 GMT), is highly anticipated by investors following a week of hawkish commentary from RBA officials. Governor Michele Bullock recently reaffirmed the bank's commitment to tackling persistent inflation, while board member Iain Harper issued a direct warning about rising domestic demand and market-based inflation measures, signaling a potential shift in the board's stance away from a conditional pause. This speech is Hauser's first major public commentary since this rhetorical escalation.
The RBA has increased its cash rate three times since the beginning of the year, bringing it to 4.60%. This series of hikes, the most aggressive since the 2022-2023 tightening cycle, was implemented to combat inflation that has remained stubbornly above the bank's 2-3% target band. Governor Bullock's statement earlier this week that the flow of data since May has not been materially different from expectations indicated a conditional pause, but explicitly ruled out an easing bias.
Board member Iain Harper's subsequent comments introduced a more acute level of concern. Harper highlighted that stronger-than-expected domestic demand has reopened the output gap, a key indicator of inflationary pressure. He also pointed to rising market-based inflation expectations as a genuine worry, suggesting underlying price pressures may be more entrenched than headline figures suggest.
The central bank's internal rhetoric appears to be tilting hawkish just as global markets price in potential rate cuts from other major central banks like the Federal Reserve. This policy divergence creates significant volatility for the Australian dollar and Australian bond yields. The last time the RBA surprised markets with a hawkish pivot in November 2025, the AUD/USD pair rallied over 3% in a single week.
Key economic metrics underscore the RBA's challenge. The latest monthly Consumer Price Index (CPI) indicator rose 3.8% year-on-year, still a full percentage point above the top of the target range. Trimmed mean inflation, the RBA's preferred core measure, sits at 3.9%. These figures have shown only a gradual decline, failing to provide the confidence the board seeks to end its tightening cycle.
Market pricing, as measured by the ASX 30-Day Interbank Cash Rate Futures, now assigns a 45% probability of at least one more 25-basis-point rate hike by September 2026. This is a significant increase from the 20% probability priced in just one month ago. The benchmark 10-year Australian government bond yield has reacted accordingly, climbing 28 basis points over the past month to trade at 4.52%.
| Metric | Current Level | Change (1 Month) |
|---|---|---|
| RBA Cash Rate | 4.60% | +25 bps |
| CPI (y/y) | 3.8% | -0.2 pts |
| 10Y Bond Yield | 4.52% | +28 bps |
Retail sales data further complicates the picture, showing a 1.2% month-on-month increase, significantly outpacing expectations. This strong domestic consumption supports Harper's warning about the output gap and suggests demand-side inflationary pressures remain potent.
A sustained hawkish tilt from the RBA presents a mixed picture for Australian asset classes. The Australian dollar (AUD/USD) stands to benefit directly from higher yield differentials, with a clear path toward testing resistance at the 0.6750 level if Hauser's tone aligns with his colleagues. Australian bank stocks, such as Commonwealth Bank of Australia (CBA) and Westpac Banking Corp (WBC), may see near-term pressure due to concerns over rising funding costs and potential loan defaults, reversing their recent outperformance.
The property sector is particularly vulnerable. Higher mortgage rates would further strain heavily indebted households, likely slowing housing market activity and impacting real estate investment trusts (REITs) like Scentre Group (SCG). Conversely, a stronger AUD would weigh on export-oriented sectors, notably materials. Mining giants BHP Group (BHP) and Rio Tinto (RIO) often see their share prices inversely correlate with the Australian dollar, as their US dollar-denominated earnings are worth less when converted back to AUD.
A counter-argument exists that the RBA is merely engaging in verbal intervention to manage inflation expectations without necessarily committing to further action. However, the specificity of Harper's comments on the output gap suggests this is more than just rhetoric. Institutional flow data from the past week shows renewed short positioning in Australian government bond futures, indicating professional traders are betting on higher yields.
The immediate market reaction to Hauser's comments will set the tone for the AUD and short-term yields. Traders will scrutinize any deviation from the script established by Bullock and Harper. The next critical data release is the quarterly Wage Price Index on June 18, 2026, which will provide crucial evidence on whether wage pressures are compounding the inflation problem.
The RBA's July 1, 2026, meeting is now a live event for a potential rate hike. The decision will hinge on the May and June CPI readings due in late June and July, respectively. A key level for the AUD/USD is the 200-day moving average at 0.6620; a sustained break above this technical level could signal a longer-term bullish trend for the currency.
Global events will also be influential. The Federal Reserve's next Federal Open Market Committee (FOMC) meeting on June 18, 2026, could either amplify or mute the RBA's hawkish stance. A dovish Fed coupled with a hawkish RBA would create maximum divergence, likely fueling a significant AUD rally.
A hawkish Reserve Bank implies a higher likelihood of further interest rate increases. For mortgage holders, this translates directly to higher monthly repayment costs on variable-rate home loans. Each 25-basis-point hike adds approximately A$75 to the monthly repayment on a A$600,000 mortgage. Fixed-rate borrowers are insulated until their current term expires, at which point they would face refinancing at significantly higher rates than those available a year ago.
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