Reserve Bank deputy governor Andrew Hauser used a parliamentary economics hearing on 18 September to argue that global interest rates are settling into a higher band than the near-zero decade after the global financial crisis, a framing that markets read as reinforcement for a cash-rate increase at the board’s 28–29 September meeting.

Appearing with governor Michele Bullock and assistant governors Sarah Hunter and Brad Jones, Hauser said his “personal view” is that the world is “rather closer now to a more sensible level of long-term global real interest rates” than a year or two ago. He echoed Harvard economist Kenneth Rogoff’s argument that ultra-low rates between the GFC and COVID-19 were the anomaly, not the new normal—while stressing that nine board members, not one deputy, will vote on policy.

What Hauser did and did not say

Hauser did not publish a fresh estimate of Australia’s neutral rate—the level at which policy is neither stimulatory nor restrictive. In March 2025 testimony he reminded senators that internal neutral-rate charts carry enormous uncertainty, often spanning roughly one to just under four per cent, and that those estimates did not drive the board’s February cut decision. This week’s message was directional: if neutral has drifted up globally, maintaining inflation control may require accepting higher borrowing costs for longer.

That nuance matters because traders had already priced about a 95 per cent chance of a 25-basis-point move to 4.60 per cent, according to LSEG data cited by ABC News. Hauser’s language nudged expectations that even after a September hike, the easing cycle many households hoped for may arrive later and shallower than forecast six months ago.

Housing and financial stability notes

Bullock acknowledged softer housing conditions but noted prices remain roughly 50 per cent above early-2020 levels. Assistant governor Brad Jones told the committee Australia’s pre-COVID house-price run exceeded peers, framing recent declines in Sydney and Melbourne as modest relative to the prior surge. None of that alters the board’s mandate—policy reacts to how housing affects activity, jobs and inflation—but it explains why politicians pressed on mortgage stress received limited sympathy for pausing hikes while services inflation persists.

Hauser separately referenced upside inflation risks after travel to the United States, where AI and data-centre investment is absorbing capital and energy. He had told ABC’s 7.30 program earlier in September that the bank is “not at the point yet” of dramatic tightening but stands ready to raise rates further if needed. Assistant governor Sarah Hunter told the same hearing that business investment is rising on data-centre and renewable-energy projects, a demand pulse that can keep labour markets tight even as retail spending softens.

Calendar pressure

The hearing landed awkwardly on the policy calendar: the next consumer price index print is due 30 September, a day after the rate decision, meaning the board will move on partial data and its own forecasts. Major banks have converged on at least one more hike before year-end, with some economists now pencil in a November follow-up that could push the cash rate toward 4.85 per cent.

For the government, Hauser’s neutral-rate commentary is a political football. Treasurer Jim Chalmers wants credit for jobs growth; the opposition will argue Labor spending keeps the bank hiking. Hauser’s intervention steers the technocratic middle: rates may feel high after a low-rate childhood, but that childhood may have been the exception. He also pushed back on the idea that board decisions are preordained, joking that if outcomes were inevitable “you could replace us with an AI bot”—a line that underscored how much September’s vote still depends on late-month labour and inflation reads.

What comes next

The Monetary Policy Board meets privately on 28–29 September, with the statement released Tuesday afternoon Sydney time. Hauser and Bullock each hold a vote. Having telegraphed discomfort with entrenched above-target inflation, the bank will need a material surprise in late-arriving data to justify holding at 4.35 per cent—and Hauser’s neutral-rate narrative makes a hold harder to explain to traders if quarterly inflation indicators do not soften.