RBA Deputy Governor Hauser says inflation is too high, adds monetary policy needs to bring inflation down and needs to reduce demand in the economy

• Not seeing recession, just a slowdown.
• Worried about inflation and upside risk to inflation.
• If inflation doesn't come down, will have to raise rates again.

Deputy governors carrying the explicit conditionality of 'if inflation doesn't come down, will have to raise rates again' is a step up from generic hawkishness: it ties the reaction function to a stated trigger, which is the form of language that has historically moved the front of the Australian curve rather than the belly. The pairing of 'not seeing recession, just a slowdown' with upside inflation risk is the classic late-cycle holding pattern, in which the board keeps optionality on further tightening while signalling the economy can absorb it; comparable rhetoric from this institution in past tightening phases has tended to precede either a follow-through hike or a prolonged restrictive hold, not a pivot. The distinction worth drawing is between the deputy reinforcing an existing consensus and the deputy front-running the governor: remarks from the number two have on previous occasions served as a softener for a board decision, but also as internal disagreement surfacing early. Transmission runs through short-dated bill futures and the AUD rate differential rather than the long end, where domestic inflation rhetoric competes with the global duration bid. Follow-ons are the tone of other RBA speakers, the next quarterly inflation print as the named trigger, and whether the language migrates into the post-meeting statement, which is where rhetoric becomes pricing.