SYDNEY, March 10 (Reuters) - A top Australian central banker said on Tuesday there would be a "genuine" debate when the board meets next week to discuss whether or not to raise interest rates, noting uncertainty from the Middle East conflict is extremely high.
In an interview with news outlet The Conversation, Reserve Bank of Australia Deputy Governor Andrew Hauser said the policy response would depend on the size and the persistence of the price shock, which was very uncertain.
"I think there will
be a very genuine debate. Inflation is too high. Higher prices don't help that debate. But there are arguments on both sides," said Hauser.
On the upside, recent data seem to have confirmed the economy has limited spare capacity, with the Middle East war, which has pushed up oil prices, not a helpful development from the policy perspective, said Hauser.
However, there are arguments on the other side as the war, if it persisted, would ultimately weigh on global activity. Hauser also singled out weaker-than-expected consumption and labour costs data as reasons not to hike rates further.
"If you act precipitously, if you compound uncertainty, if you drive the economy to slow down too rapidly, then you are going to push inflation down and you are going to harm people as unemployment picks up."
The RBA was forced to raise interest rates by a quarter-point to 3.85% last month as inflation reaccelerated after three rate cuts last year.
Markets are wagering on a 50% chance that the RBA will follow up with another hike on March 17, while a move in May is more than fully priced in. For all of 2026, there is an additional tightening of 60 basis points expected.
(Reporting by Stella Qiu; Editing by Tom Hogue and Sonali Paul)
