MNI BRIEF: Stronger Demand Drove Hike - RBA's Hauser

The Reserve Bank of Australia’s 25bp February hike to 3.85% reflected stronger global growth, looser financial conditions and firmer private demand relative to supply, Deputy Governor Andrew Hauser said at an industry event Wednesday.

“The reason policy turned around in February is because the facts changed,” he said, referring to last week’s decision. (See MNI RBA WATCH: Bullock Says Policy Too Loose, Hikes 25BP)

The RBA had been surprised by the rebound in the global economy over 2025, which lifted demand for Australian exports, Hauser noted. “I don’t think anyone thought that we would be sitting here in early 2026 with the global economy powering ahead,” he said, pointing to strong Taiwanese export and GDP data driven by semiconductor and server production linked to the AI and tech boom. “We trade with these countries and they demand our goods.”

Accommodative financial conditions also supported activity, he added, saying the Bank had “underestimated the extent to which those financial conditions might imply a somewhat less restrictive stance of policy than we thought.”

Hauser cited a third factor—the pickup in private demand relative to supply—noting the timing had caught policymakers off guard. “Our models kept saying demand should be stronger. The models are right—they were just right at the wrong time,” he said.