Hauser denies signalling November rise before board decision

The defence followed Tuesday’s six–three vote to lift the cash rate by 25 basis points to 4.85 per cent, its highest level in 18 years. It was the fifth increase this year.

The scrutiny centres on Hauser’s 21 October appearance at a Citi investment conference, where he warned that the “inflation outlook looks materially worse”.

Market pricing for a November increase after Hauser’s appearance climbed from about 20 per cent to 60 per cent, before reaching about 80 per cent after worse-than-expected inflation figures on 28 October.

Asked whether that sharp repricing reflected an effort to prepare markets for a rate increase, Hauser denied using his public remarks to push expectations towards a preferred outcome.

“There was no attempt to do open mouth operations for the market in my comments,” he said.

“I was trying to do what I’m always trying to do, which is to say how I see the data, and I’ll repeat the point I made earlier, that in no way to front-run or box in the Board. That isn’t our goal.”

Hauser also placed the response in the context of his broader speaking record, saying most of his 34 public speeches since arriving in Australia in 2024 had “barely moved markets at all”.

He linked greater public engagement to the independent RBA review released in 2023, which recommended officials get “out and about” and explain the institution’s thinking more effectively.

A divided board, not a settled outcome

Hauser argued that vigorous discussion helped members of the Monetary Policy Board (MPB) confront difficult choices and challenge groupthink.

“What I see on our Board, and frankly, it’s an enormous strength, if I didn’t believe this, I wouldn’t say it to you, are incredibly diverse group of experienced, able, diverse views, able to challenge and bringing their experience and their knowledge into the room and being fearless to challenge each other and to challenge other views,” he said.

“I make no apology for the fact that the Board has very, very lively debates about those issues.”

Westpac chief economist Luci Ellis, a former RBA assistant governor who had forecast November’s increase, offered a different assessment, saying public commentary had “created a sense of inevitability”.

“The internal members were all singing with one voice and trying to correct for the market being overly dovish,” she said.

“But we know from the split vote not everyone on the board buys the RBA’s downbeat view of the economy’s supply capacity.”

During her post-meeting press conference, governor Michele Bullock similarly stressed that public appearances explained incoming information rather than delivered guidance.

“A lot of people interpreted our communication strategy as to go out and massage the market to where we want things to go. One thing I want to be absolutely clear about here: I don’t make the decisions. Andrew Hauser does not make the decisions,” she said.

“The idea that there might be a strategy as information comes out for me to go and sort of ‘nudge, nudge, wink, wink’ to the market … that would be entirely inappropriate.”

Explaining the strategy without promising rates

In Thursday’s Sir Leslie Melville Lecture, Hauser said clearer explanations for households and businesses should help people understand how the RBA made decisions.

“Not a promised rate path – ‘forward guidance’ – but a reaction function that gives people confidence we’ll achieve our goals,” he said.

“That’s an important distinction: explaining how we would respond as circumstances change is different from promising what interest rates will be. We need people to understand the strategy, not mistake it for a guarantee.”

Warning that trust was hard won but easily lost, Hauser invoked former US Federal Reserve chair William McChesney Martin’s description of a central bank as a “chaperone who has ordered the punch bowl removed just when the party was really warming up”.

“Taking away the punch bowl is rarely a way to win instant popularity. The question is whether people can see why the difficult decision is necessary, even when its immediate effects are unwelcome,” he said.

He said that effort went beyond maintaining the institution’s reputation, arguing that confidence in the RBA’s ability to meet its objectives could make monetary policy more effective.

“For a central bank, trust is not a nice-to-have. It’s integral to how monetary policy works. When people trust us to deliver the goals we’ve been asked to pursue, policy is more effective and less costly,” Hauser said.

[Related: Inflation won’t return to target until mid-2028, says RBA]