The Reserve Bank of Australia's (RBA) Deputy Governor Andrew Hauser's comments on Wednesday sent shockwaves through Australia's finance and mortgage broking industries.
The central bank's second-in-command said the outlook for inflation "looks materially worse" than previous estimates, during a fireside chat at the Citi Australia & New Zealand Investment Conference in Sydney.
Hauser's remarks quickly stoked fears of a fifth interest rate hike this year. The RBA, including head honcho Governor Michele Bullock, have repeatedly said the board would not reduce rates again until inflation was back within the target range of 2% to 3%.
After the RBA's September decision, Bullock said the board would consider increasing rates again "if that's what's needed to get inflation down.
"We need to stop this high inflation," Bullock said in September. "It's critical that we stop expectations for high inflation from becoming embedded in price-setting decisions across the economy, or the problem will only get worse. That's why bringing inflation down is our priority."
The latest consumer price index (CPI) didn't help ease market chitters. The August print — released the day after the September meeting on monetary policy — revealed that both headline CPI and trimmed mean inflation are still above the RBA's target inflationary range, and in some cases rising.
Headline CPI came in at 4.0%, up from 3.5%, while trimmed mean remained stubbornly at 3.6%, where it has been sitting for the last three months.
On Wednesday, Hauser described the growing belief that high inflation is here to stay as "the central banker's nightmare."
Borrowers have plenty of reason to be nervous, particularly mortgage holders and property investors already feeling the squeeze. The RBA has already raised interest rates four times in 2026, pushing the official cash rate (OCR) to 4.60%. Another hike could make an already difficult market even tougher. With living costs climbing, tax incentives cut under a revised federal budget, house prices falling and unemployment on the rise, household budgets and borrowing power are under growing pressure. With all the noise, uncertainty hangs over the market.
"There's not one media outlet, unfortunately, that says anything positive. And you can only listen to it so many times before it starts to have an impact on you personally," Robert Sordillo, founder and managing director of Adelaide-based brokerage Significant Financial Solutions, told Australian Broker. "It's hard not to listen to everyone feeling the pain at the moment. It's pretty tough; the cost of living is quite expensive. And the cost to run a household is just becoming unbearable.
"It's reflective in the market: lending has slowed; sales have slowed. Prices have decreased," he continued. "People are definitely worried. It definitely feels like a recession. It's super intense. That's based purely on all the negativity."
Nick Chong, founder and managing director at Sydney-based mortgage advisory firm Rateseeker, said the central bank's next move will have a direct impact on the market.
"Consumer confidence always takes a hit when rate hikes make front-page news," he said. "If the RBA holds fast, expect sentiment to steady. Much of the anxiety stems from being kept in the dark about what’s next. But if rates rise, confidence will take another nosedive."
Australia Broker spoke to brokers and industry leaders to get their take on developments, what they’re seeing on the ground and whether they expect another interest rate hike.
Founder and managing director at Significant Financial Solutions
"I'm expecting a rate rise. The only, potentially, saving grace for a non-rate rise is the increase in unemployment. But I don't think unemployment has made enough of an impact on the inflation numbers. With the unemployment growth, it could potentially stall a rate rise for one month. But very unlikely, to be honest. So I'm leaning more towards a rate rise than not. And if anything, the unemployment numbers might hold off a rise in December, but then come January, February, we're going to have more issues with inflation."
Founder and managing director of Perth-based Sonam Capital
"I do think we're going to see more rises until inflation's under control. The RBA is given one tool — albeit a fairly blunt one — which is the cash rate, and one target, which is inflation. And since inflation is above the target rate, therefore they will raise rates. Effectively, we know that. I don't think unemployment will impact their decision. The RBA will look at unemployment. But we're in a period where, I actually fear, we're entering a period of stagflation where we're seeing rising inflation, we're seeing rising unemployment and the potential for a recession. And we seemingly have a government that is out of their depth in controlling this, or are in fact creating it. So, I'm deeply concerned about the state of the economy nationally. We're already in a per capita recession. GDP per capita has been going backwards for a few years now. The only reason why we're not in a technical recession is because of the population growth. But the effect on individuals is we're all worse off.
For brokers, if you're just broking home loans, you need to be really proactive in helping your existing clients, because we are seeing cost-of-living pressures out there on people. And if people are concerned about their jobs, then that's not going to ease any anxiety about it. People are going to be a lot more price sensitive."
Founder and director of Sydney-based mortgage advisory firm Rateseeker
"My base case is a rate hold. But we’re not out of the woods yet. The RBA has already lifted rates four times this year and made it clear they won't hesitate to pull the trigger again if necessary. The proof will be in the pudding when the September quarter CPI lands. If underlying inflation comes in hot, a fifth hike is firmly back on the radar.
If the RBA hikes again, transaction activity will likely hit a speed bump. Higher borrowing costs mean buyers have to tighten their belts, which pulls back overall purchasing power. Borrowers have absorbed a full percentage point in hikes in less than a year. So a fifth rise would turn up the heat on household budgets. Every 25-basis-point increase shaves off borrowing capacity of anywhere between $15,000 to $30,000, with recent buyers and first-time homebuyers feeling the pinch first.
For brokers, this will trigger another wave of refinancing enquiries. Clients will be shopping around to check if their current lender is still doing right by them. However, a market slowdown presents a massive opportunity for brokers to step up to the plate. It’s the ideal environment to help clients keep their heads above water by restructuring loans, extending terms, or finding lower rates across your lender panel."
Founder and managing director at Melbourne-based Empower Wealth Advisory
"It is a live call in November. Another rate rise definitely can't be ruled out with the current inflation settings that we currently have. And there's every chance that inflation is still running a little bit hotter than the RBA would like. So we're preparing. Prepare for the worst and hope for the best is how we're looking at it."
Economic director at comparison platform Compare the Market
"The Reserve Bank’s next cash rate decision remains finely balanced, with upcoming inflation data likely to be decisive. But if we get a dirty inflation figure that comes in higher than expected, then I reckon the Reserve Bank is going to say, ‘All bets are off. We’ve got to focus on inflation.' And there could be a rate rise."
