Australia's seasonally adjusted Wage Price Index increased 3.2% year-over-year in the second quarter of 2026, matching market expectations and marking the weakest annual wage growth since the fourth quarter of 2024. On a quarterly basis, wages grew 0.8%, maintaining the steady pace seen over the past four quarters. In a Wednesday address, Reserve Bank of Australia Deputy Governor Andrew Hauser issued a hawkish warning, stating that inflation remains too high and that monetary policy may need to tighten further if upside price risks materialize. Hauser cited escalating Middle East tensions, global AI-driven investment, and soft domestic productivity as core inflationary threats. The RBA has already raised interest rates by 75 basis points year-to-date, though it opted to hold its benchmark cash rate at 4.35% for a second consecutive meeting. Following the RBA's comments and the wage data release, the benchmark S&P/ASX 200 Index slipped 28 points, or 0.3%, to 9,042 in early Wednesday trading, extending its losing streak to a sixth session and touching a two-week low, while the Australian dollar retreated below $0.71 while remaining near a ten-week high.
Hawkish RBA warning of potential rate hikes pushes bond yields up
