Reserve Bank deputy governor Andrew Hauser defended the RBA’s reluctance to criticize the Albanon government’s spending choices, saying it was not the job of “unelected officials” to do so.

Speaking in Sydney, Hauser passionately defended the role central bankers should play in public policy debates.

He said that does not include criticizing the government’s usual spending choices.

“There has been a lot of criticism over the last week or two of the central bank not speaking up,” he said.

”[But] We are equal opportunity financial policy makers. A dollar of demand from the public sector and a dollar of demand from the private sector should count exactly the same in terms of their impact on inflation.

“The composition of aggregate demand is for the government to decide, and the people are left to decide in the usual way whether they agree or disagree.”

“Australia has a very robust electoral system.”

Hauser said he was also skeptical of the idea that the Reserve Bank should be more vocal about its views, especially if it meant “attacking” the government’s position.

“I always think it’s worth asking: What if we come along and have an opinion contrary to yours?” he said.

“Unelected officials, some of whom are from other countries, who comment on the decisions of elected governments.”

political debate about inflation

Hauser’s comments came days after Central Bank President Michel Blok rejected accusations that Albania’s government spending caused the rise in inflation, saying that while the spending may have contributed, it was not the sole cause of inflation.

Mr Bullock told a parliamentary committee on Friday there were a number of reasons why inflation had risen recently in Australia.

He cited low unemployment, rising real incomes, lower interest rates, tax cuts and government spending as a number of factors contributing to faster inflation in the second half of 2025.

He also reminded MPs that the RBA has pursued a different strategy to curb inflation in recent years than other central banks as it seeks to keep unemployment low due to the coronavirus lockdown.

“Everyone is talking about the position we’re in in a very negative way, but it’s actually very positive,” Block said.

“We are in this situation because the labor market remains very strong, with relatively low and stable unemployment rates.

“This is good news, but I think people forget that,” she said.

Is the Australian economy so balanced that it is prone to inflation?

Mr Hauser echoed some of those comments on Wednesday, saying the RBA’s strategy to push down inflation left Australia’s economy in a very delicate balance, perhaps making it more susceptible to demand shocks.

“We had a different policy strategy than other countries,” he said.

“We didn’t raise rates as much during the coronavirus inflation boom, which means we were slow to cut rates as well.

“As a result, I think you can say that this economy is closer to equilibrium than many other economies that you might think of.

“New Zealand is clearly in a very close situation. New Zealand opened up its economy with a large negative output gap and then went into recession.

“Canada clearly had its own big challenges.

“Along with the United States, Europe has its own structural growth challenges, so most other countries are nowhere near as balanced as Australia’s economy.

“In some ways, the reason behind our success in keeping the economy close to equilibrium is that even relatively small demand shocks like last year can cause inflation to rise a little bit. [monetary] Policies need to respond.”

Mr Hauser said Australia was in an interesting position due to the anti-inflation strategy the RBA had pursued in recent years.

“At this point, we don’t know whether this acceleration in inflation will be completely temporary, completely permanent, or somewhere in between. That’s the big debate among all the economists here,” he said.

“We look at the data and take our view.

“But I think it is fair to say that it is a result of that. Hubris is a dangerous thing, and with our ‘relative success’ in keeping the economy close to equilibrium, we now face the challenge of inflation due to rising demand that we are seeing globally a little earlier than other countries.

“We’ve clearly learned something about our domestic economy as well. Let’s see. Are we going to be a bellwether of many countries that start tightening policy over the next year or two, or are we a completely unique case with our own domestic problems?”

“It’s an interesting question, but I don’t know which direction it will go.”

The RBA raised interest rates in February because ‘the facts have changed’

Hauser also said the RBA raised interest rates in February because “three important facts” had changed in recent months.

The first fact that changed was the world.

He said the global economy is gaining momentum and no one expected us to be in this situation at the beginning of 2026.

He pointed to Taiwan’s export statistics and how they relate to the insatiable demand for chips and servers for the AI ​​and technology boom. He said no one expected such solid growth at the global level.

The second fact that changed was the RBA’s ‘policy stance’.

He said the RBA’s stance on monetary policy did not just refer to the level of the cash rate.

He said the level of Australian credit growth and an “unusually low risk premium in international markets” had also helped boost demand.

“And perhaps, raise your hand, we [at the RBA] “We underestimated the extent to which these financial conditions could suggest a slightly less restrictive policy path than we had thought,” he said.

The third fact that has changed is that private demand has surged relative to supply.

“In fact, we, especially myself, were hopeful that the economic recovery would happen sooner, but it hasn’t. Our models…kept saying, ‘Private demand should be stronger.’ You know, there was the issue of low confidence, and the tone and President Trump and everything else that might be suppressing that the models were having a hard time being taken seriously,” he said.

“And again, the model was right, and exactly right at the wrong time.

“So I think models are an important input. We treat them skeptically, but we don’t ignore them. And in fact, one of the lessons I’ve learned from last year is that it might be a bit of a mistake to ignore them completely.”