RBA drops fresh clue on rate hike as inflation warning grows

Another interest rate hike could be just around the corner for borrowers, with new warnings from Reserve Bank executives that inflation is likely worse than data is showing. Speaking on the The Pay Off podcast on Tuesday, assistant governor Sarah Hunter said interest rates were the tool with the power to influence the economy most.“We use interest rates because they get into everywhere, they get into all the nooks and crannies, eventually they’ll have an impact on all parts of the economy,” she explained.It comes as the Reserve Bank continues to raise its concerns about Australia’s stalling productivity, slow economic growth and ability to manage both domestic and international inflation pressures.“Capacity pressures are manifesting as inflation, we know that’s happening,” Dr Hunter warned. “Growth has also slowed down in the first half of the year; we were expecting that. The housing market has now gone into a cyclical downturn and that’s going to dampen activity into the future."Dr Hunter, who provides economic analysis and advice to the RBA’s monetary policy board but does not sit on it, says it is weighing up the above risks in particular.RBA assistant governor Sarah Hunter say...