RBA Deputy Governor Warns Trust Loss Could Hike Rates
Andrew Hauser warns that eroding public trust in the Reserve Bank of Australia could force more aggressive interest rate hikes to combat inflation.
Reserve Bank of Australia Deputy Governor Andrew Hauser warned that eroding public confidence in the central bank's ability to control inflation could make taming price pressures more costly. Speaking in Canberra on Thursday, Hauser noted that a lack of trust may force the bank to raise interest rates more aggressively to achieve disinflation.
Hauser described current data showing that public trust has remained stable or slightly increased over the past 18 months as a "surprising" result. This stability comes despite a period of aggressive interest rate hikes implemented to combat inflation that has remained above the bank's 2-3% target range for over five years.
These warnings follow the Reserve Bank of Australia's Tuesday decision to lift interest rates to an 18-year high of 4.85%, marking the fifth increase this year. The board was split on the decision, with three members voting against the hike as unemployment rises and the economy slows. The resulting cost-of-living pressures and higher mortgage rates have created significant political pressure for Prime Minister Anthony Albanese’s Labor government.
