Reserve Bank of Australia warns of potential rate hikes amid inflation risks

The Reserve Bank of Australia (RBA) has signaled that interest rate hikes may be necessary if inflation risks crystallize. Deputy Governor Andrew Hauser emphasized that inflation remains unacceptably high and noted that the central bank must continue to work toward reducing economic demand to bring price pressures down.

Hauser identified several upside risks to inflation, including the Middle East conflict, the global artificial intelligence boom, and poor productivity. While the RBA has recently held rates steady, the central bank maintains a tightening bias, with Governor Michele Bullock previously hinting that further hikes could occur if inflation does not cool as expected.

In the currency markets, the Australian dollar has experienced volatility. Despite a hawkish tone from the RBA and steady wage growth of 3.2 percent, the AUD/USD pair has faced downward pressure, recently trading near the 0.7080 level. Market analysts are monitoring key support levels to determine if the currency's broader bullish trend will continue or if a deeper correction is underway.