Hauser Says Worsening Inflation Puts November Rate Rise in Play

Reserve Bank of Australia Deputy Governor Andrew Hauser said the inflation outlook had worsened since the bank’s August forecasts, putting a possible November rate increase in play while warning that further tightening could weaken economic activity and employment. The RBA board has not decided whether to raise rates and is still finalising its forecasts. Hauser spoke at an investment conference in Sydney on October 21. He cited oil prices about one-third above the level assumed in August and rising technology-related costs as adding to price pressures. He also pointed to domestic capacity constraints and concern that some businesses may be treating inflation of 3% to 3.5% as normal, above the RBA’s 2% to 3% target. The bank faces a choice between raising rates to limit the risk that inflation becomes more persistent and holding rates steady to protect employment and activity, Hauser said. He noted that monetary policy was already having an effect: the labor market was easing and consumption growth was tepid, even as the inflation outlook deteriorated. Recent figures show the competing pressures. The Australian Bureau of Statistics reported that consumer prices rose 4% in the...