Fireside chat by Andrew Hauser, Deputy Governor - Sydney - 21 October 2026

Monetary policy faces significant challenges as the Reserve Bank of Australia navigates persistent inflation, supply shocks, and a dual mandate to manage both price stability and labor market health. Despite recent rate hikes, the inflation outlook remains precarious due to rising energy costs, global geopolitical tensions, and an AI-driven demand boom. Productivity growth, currently near zero, remains a critical constraint on the economy's speed limit, necessitating a delicate balance between restrictive policy and economic activity. While mortgage holders face immediate cash flow pressures, the RBA emphasizes that the exchange rate and broader financial conditions are primary transmission mechanisms for monetary policy. Ultimately, the central bank must prevent one-off supply shocks from embedding into long-term inflation expectations, even as it balances the risk of weakening the labor market against the necessity of curbing inflation to protect vulnerable households.