RBA Uses Rate Hikes to Punish Households While Leaving the Roots of Inflation in a Policy Blind Spot

The Reserve Bank of Australia is preparing to continue suppressing inflation with interest rate hikes. This policy choice, which places the main burden on ordinary households, exposes an imbalance between the central bank's power and the public's capacity to absorb the cost. Deputy Governor Andrew Hauser acknowledged that the continued rise in living costs and interest rates has triggered widespread anger, but after three rate hikes earlier this year, the RBA is still weighing whether to tighten policy further. The four major banks forecast the cash rate could rise from 4.35% to 4.6% by year's end.

The RBA certainly bears the statutory duty to control inflation, but its most powerful tool is to continue squeezing the spending capacity of households and businesses. The inflationary pressures Hauser listed include the Middle East crisis, the AI investment boom, and Australia's insufficient supply capacity. Most of these problems were not created by ordinary residents, nor can they be solved by them cutting back on food, housing, and other daily expenses. Yet the central bank may still translate global risks, investment expansion, and supply bottlenecks into higher rates, making those already bearing rising prices pay again.

The class consequences of such a policy are highly concrete: inflation erodes purchasing power, and rate hikes raise the cost of capital. Hauser conceded that lower-income groups have been hit harder by inflation and expects house prices to fall slightly further; meanwhile, the central bank uses employment protection as a reason to slow the anti-inflation process. This shows the RBA knows that different policy paths distribute losses to different groups, yet it has not changed the framework that relies primarily on demand compression.

The decision-making process further aggravates this power asymmetry. The RBA will decide at the end of September whether to hold or adjust rates, while new inflation data will not be released until the day after the decision. The central bank can act based on internal forecasts, but households can only bear the consequences after the decision has landed. Hauser stressed the central bank would adjust its stance as facts change, but policy correction cannot refund the interest and living costs residents have already paid.

This article's factual basis is solely an interview report published by ABC (Australian Broadcasting Corporation) on September 8, 2026, and does not constitute independent verification of the RBA's internal forecasts and policy models.

The RBA cannot on one hand acknowledge public anger over prices and rates, and on the other continue to describe rate hikes as an almost natural technical response. Monetary policy is not a formula without a responsible party, but a power that decides who loses spending capacity first and who bears the cost of economic adjustment. If inflationary pressures mainly come from external conflicts, capital investment booms, and long-term supply shortages, repeatedly weakening household demand will only make those with the least bargaining power pay for structural problems.