RBA boss warns mortgage holders that rate rises will be used again

Australian mortgage holders have been given a stark warning that the Reserve Bank of Australia is willing to continue to lift interest rates.

In comments made at the Queensland Futures Institute Annual Regions Summit in Brisbane, RBA deputy governor Andrew Hauser said inflation was simply too high, despite the bank keeping the official cash rate on hold at its August meeting.

“While we concluded last week that interest rates are okay where they are for now, we are worried about the inflationary outlook and we are worried about the upside risk to inflation,” Mr Hauser said.

“One is the Middle East crisis and the possibility it gets worse,” he said.

“Secondly there is an extraordinary boom going on in the global economy and the tech sector and that threatens inflation from overseas.

“Weak supply growth and productivity growth at home is something we are watching closely.

“If those upside risks to inflation crystallise and we don’t see inflation coming down, we will have to raise interest rates again and we will do so.”

Mr Hauser’s comments follow the Reserve Bank’s widely predicted interest rate hold at last Tuesday’s meeting.

So far the RBA has lifted the cash rate at three of its five meetings in 2026, by a total of 75 basis points, in its fight against inflation.

But it has paused its interest rate hiking cycle over the last two meetings.

Australia’s trimmed mean inflation rate – which strips out the top and bottom 15 per cent and is used by the RBA – came in at 3.60 per cent for the 12 months to June.

Mr Hauser reiterated it was the central bank’s job to keep inflation between the target of two to three per cent while also maintaining full employment.

“Everywhere you look people say prices are too high, cost pressures are too strong and while some of that is not home grown … but some of it does come from Australia.”

Mr Hauser also warned that the economy would have to get slightly worse in order to bring down inflation and get it back to target.