In a wide-ranging interview with ABC's 7.30, Mr Hauser described inflation as the central bank's 'one big problem' and said the RBA is not yet at the point of taking drastic action — but he gave a strong indication that a rate hike is being considered.
'We could raise interest rates sharply [and] we could do it tomorrow,' Mr Hauser said. 'We could decide, "You know what? We no longer take seriously the full employment part of our objective. We're going to bring inflation down come hell or high water."'
He denied a rate hike was 'inevitable' but said the question for the RBA now is whether it has done enough or whether more is needed. The RBA raised rates three times at the beginning of this year.
Mr Hauser attributed Australia's ongoing inflation struggle to a 'three-headed monster': the Middle East crisis, an unexpected global boom driven by AI, and the weakness of the Australian economy's supply potential.
'People are furious about inflation,' Mr Hauser said. 'I understand why. It's unfair. It hits people on low incomes, it damages price signals, it makes the job of companies difficult.'
He added that the impact of inflation is long-lasting: 'When people go to the supermarket every week, they look at the price of the goods they're buying, they compare them to where they were a few years ago and they say, "Hell, what's going on here?"'
Despite the pressure, Mr Hauser defended the Australian economy as 'doing quite well' on unemployment and real household incomes, but singled out inflation as the nation's biggest problem.
Australia's four major banks are all forecasting the RBA will lift interest rates by the end of the year.