SYDNEY--Central bankers are usually reserved, with their public comments limited to pre-prepared lines that are often coached into them by internal staff.
But there are also rare moments when the curtains are pulled back, and the reality of the debate within the corridors of a central bank are made visible.
On Tuesday, the Deputy Governor of the Reserve Bank of Australia, Andrew Hauser, provided such a moment, when in a prime time television interview he became animated, saying that people are "furious" about the way inflation has stayed high for so long.
Hauser, who came to the RBA from the Bank of England in 2024, was revealing the depth of feeling among policy makers about inflation risks which have started to boil up again.
Notably, Hauser said that after recent central bank meetings in the U.S., he has grown more concerned about the inflation outlook.
The elevated anxiety at the RBA shouldn't come as a surprise given that core inflation, which directs policy decisions more than anything else, has spent 17 of the last 20 quarters above the RBA's 2% to 3% target band.
The RBA has permitted this to some extent, saying that it also wanted to focus on retaining as many jobs as it could through the inflation surge that followed the end of the Covid-19 pandemic.
But the RBA may now be losing its nerve.
It's clearly growing fearful that a combination of factors--chronically weak productivity growth, a surge in investment linked to artificial intelligence data centers, and the unresolved Middle East conflict--will spur another surge in prices.
To his credit, Hauser has devoted a lot of his time at the RBA to meeting Australians in all walks of life. He has visited many country areas and spent a lot of time getting to know people within the financial markets, banks and the media.
So his assessment that the community is furious carries a lot of weight.
To be sure, the RBA can't afford to allow inflation to surge again. The reputational damage it would incur would be catastrophic.
While Hauser said the RBA hasn't abandoned its policy of going easy in the fight against inflation, his comments suggest a change isn't far off
If that moment comes, economists will conclude that the RBA is willing to induce a recession in order to finally banish inflation.
Such a policy shift would also likely turn a recent sharp fall in house prices into one of the biggest collapses seen in half a century.
Economists are coming to the view that the RBA will indeed deliver a fourth interest rate rise this year at the conclusion of its next policy meeting at the end of this month.
JPMorgan Australia's chief economist, Ben Jarman, is among them.
Recent hawkish commentary by senior RBA officials "suggests something has shifted," Jarman said.
The RBA appears worried about elevated oil prices, surging AI investment and the supply potential of the economy, he added.
These will remain concerns at month-end, and a 25-basis-point official cash rate increase 4.60% on Sept. 29 is on the cards, he said.
The inflation risks that have been worrying the RBA are becoming reality and a further interest-rate increase is set to be delivered, said Ivan Colhoun, consultant with Marex.
"The policy-setting board of the RBA has seemingly reduced tolerance for further delay," he adds.
Hauser's comment were "certainly hawkish," said Jonathan Kearns, a former senior manager at the central bank. "It had to be...the mood within the RBA has to be worried," he added.
A further pickup in inflation would be a big hit to the RBA's credibility, Kearns, chief economist at Challenger, added. "They have to hike this month."
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