RBA's Hauser due to speak, hawkish tilt expected after Harper's inflation warning

RBA Deputy Governor Andrew Hauser speaks at a Sydney fireside chat on Australia’s economic outlook, with markets watching for any signal on the path of rates after a hawkish week for RBA rhetoric. 2.30pm Sydney time / 0430 GMT/ 0030 US Eastern time Summary:RBA Governor Bullock reaffirmed the current stance earlier this week, noting inflation remains too high and that monetary policy is well placed to respond to developments after three rate risesBullock said the flow of data since May has not been materially different to expectations, signalling a conditional pause rather than an easing biasBoard member Harper struck a notably hawkish tone, warning that stronger domestic demand has reopened the output gap and that rising market-based inflation measures are a genuine concernHauser speaks at a fireside chat hosted by Sky News and The Australian in Sydney, focused on Australia’s economic outlookReserve Bank of Australia Deputy Governor Andrew Hauser takes the stage at a Sydney fireside chat on Friday, and the audience will be listening for any sign that the central bank is shifting its posture after what has been a notably hawkish week in RBA communications.The backdrop is not comfortable for those hoping for a more dovish signal. Governor Bullock reiterated earlier this week that inflation remains too high and that the board is well placed to act further if needed, language that reinforces the conditional nature of the current pause rather than signalling any tilt toward easing. Then board member Ian Harper went further, flagging that stronger-than-expected domestic demand has reopened the output gap and that market-based inflation measures moving higher are a worrying development, comments that put rate hike expectations firmly back on the table.Hauser, who sits at the centre of RBA policy deliberations as deputy governor, is unlikely to cut across that messaging. A fireside chat format invites more candid observation than a prepared speech, but the institutional incentive is to stay consistent with the week’s tone. Markets will be parsing any commentary on the labour market, services inflation, and whether the board views the current setting as genuinely restrictive or merely less accommodative than it needs to be.The bottom line is that the RBA’s pause is looking increasingly conditional, and Hauser is unlikely to do anything to change that read on Friday.—Any hawkish lean from Hauser would reinforce the signal sent by Harper earlier this week and cement market expectations that the RBA’s pause is conditional rather than a pivot. Australian rates and the AUD will be sensitive to any language that explicitly reopens the door to further hikes, particularly given Harper’s comments on the output gap and rising market-based inflation measures. A more neutral tone would likely be read as confirmation of the current hold, with limited market reaction.
This article was written by Eamonn Sheridan at investinglive.com.

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