RBA Deputy Governor Signals "Hard Choices" Ahead as Inflation Outlook Worsens

Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser stated that the nation faces “hard choices” regarding its economic future on October 20, 2026, as the RBA's cash rate stands at 4.60% after four increases this year[1][10]. This signals potential further tightening of monetary policy, which could affect household budgets and economic stability across Australia[12].

Hauser's comments suggest that Australians may face continued increases in borrowing costs as the RBA works to bring inflation back to its 2-3% target[4][7]. The RBA's next interest rate decision is scheduled for November 3, 2026, with new inflation figures due on October 28, 2026[3][9][10].

What the records show

During a fireside chat at Citi's Australia and New Zealand Investment Conference in Sydney, Deputy Governor Hauser said Australia's inflation outlook had “deteriorated” and looked “materially worse” than previously forecast[10][12]. He emphasized that inflation had been elevated for a long time and that the RBA could not allow inflation expectations to deviate from its target[10][11]. The RBA's target inflation rate is 2-3%[7][11]. The Board's preferred measure of underlying inflation, trimmed mean inflation, remained at 3.6% for July and August 2026[3][8][9]. Headline CPI rose to 4.0% in August from 3.5% in July[9]. Businesses are reporting cost pressures as their primary concern[10][11].

The timeline

The Reserve Bank of Australia has increased its official cash rate four times in 2026[1][3][5][7]. The first increase in 2026 brought the rate from 3.60% to 3.85% on February 3[2]. After holding steady in June and August, the RBA raised the cash rate by 25 basis points to 4.60% on September 29, 2026[1][3][5][6][7][8]. This marked the fourth rate increase of the year and brought borrowing costs to their highest level since 2011[3][5]. Deputy Governor Hauser made his recent comments on October 20, 2026[10][11][12]. The RBA's next interest rate decision is scheduled for November 3, 2026, with the September-quarter inflation figures due for release on October 28, 2026[3][9][10].

What changed and for whom

The RBA has been raising interest rates to curb household spending and discourage higher prices and wages, aiming to bring inflation back under 3%[4]. The official cash rate increase in September meant home loans for Australians also increased[8]. The RBA Board cited persistently high inflation, global energy price pressures, and strong domestic demand as reasons for the rate hikes[3][5][6][7]. While some data indicates a slowing in the labor market and housing, Hauser stated that the inflation outlook has worsened[10][11]. This suggests that despite the previous rate increases, the RBA believes further action may be necessary[12].

What the subject has said publicly

On October 20, 2026, Deputy Governor Andrew Hauser publicly stated, “We're in a world of hard choices. I think that's the reality here”[10]. He acknowledged that monetary policy was effective and had led to some slowing in labor market and housing data, but underlined that the inflation outlook had deteriorated[10][11]. He warned that the inflation outlook was “materially worse” and that the central bank's key concerns had “materialised,” suggesting that further tightening might be painful but necessary to prevent inflation expectations from becoming entrenched[12]. He also mentioned that RBA staff were still finalizing their forecasts and that he did not know what the Board would decide at its upcoming meeting[10][11].

What we could not confirm

We could not confirm if the RBA will raise interest rates at its November 3, 2026, meeting.
We could not confirm the exact details of the RBA staff's finalized inflation forecasts mentioned by Deputy Governor Hauser.