{"id":73335,"date":"2026-10-20T18:38:12","date_gmt":"2026-10-20T22:38:12","guid":{"rendered":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/rba-signals-hawkish-shift-as-citadels-griffin-warns-of-ai-bubble\/73335\/"},"modified":"2026-10-20T18:38:12","modified_gmt":"2026-10-20T22:38:12","slug":"rba-signals-hawkish-shift-as-citadels-griffin-warns-of-ai-bubble","status":"publish","type":"post","link":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/rba-signals-hawkish-shift-as-citadels-griffin-warns-of-ai-bubble\/73335\/","title":{"rendered":"RBA Signals Hawkish Shift as Citadel\u2019s Griffin Warns of AI Bubble"},"content":{"rendered":"<h2>Key Takeaways<\/h2>\n<ul>\n<li><strong>RBA Deputy Governor Andrew Hauser<\/strong> warns that the Australian inflation outlook is &quot;worse than forecast,&quot; keeping a potential interest rate hike on the table for the <strong>November 3<\/strong> meeting.<\/li>\n<li><strong>Citadel CEO Ken Griffin<\/strong> stated that Artificial Intelligence is &quot;almost certainly&quot; in a bubble, though he simultaneously predicts a &quot;golden age&quot; for entrepreneurs as the technology matures.<\/li>\n<li><strong>Market expectations<\/strong> for a Reserve Bank of Australia rate hike have surged, with traders now pricing in a significant probability of the cash rate rising from its current <strong>4.60%<\/strong> level.<\/li>\n<li><strong>AI-related volatility<\/strong> has intensified following Griffin&#39;s comments, coinciding with a sharp <strong>11.6%<\/strong> drop in the semiconductor index over recent sessions, erasing over <strong>$1.6 trillion<\/strong> in market value.<\/li>\n<\/ul>\n<h2>RBA Warns of Deteriorating Inflation Outlook<\/h2>\n<p>The <strong>Reserve Bank of Australia (RBA)<\/strong> has adopted a more hawkish tone as Deputy Governor <strong>Andrew Hauser<\/strong> acknowledged that inflation remains stubbornly high and is currently tracking above the central bank&#39;s previous projections. Speaking at a Citi investment conference on <strong>October 20, 2026<\/strong>, Hauser emphasized that the RBA cannot allow inflation expectations to become unanchored, despite signs of a loosening labor market with unemployment recently hitting <strong>4.7%<\/strong>.<\/p>\n<p><em>The central bank is closely monitoring the September-quarter CPI data due on October 28, which will be decisive for the November policy decision.<\/em> While Hauser noted that monetary policy is &quot;working,&quot; he highlighted that businesses still cite cost pressures as their primary concern. This suggests that the current cash rate of <strong>4.60%<\/strong> may not yet be restrictive enough to bring inflation back to the <strong>2-3%<\/strong> target range.<\/p>\n<h2>Citadel\u2019s Ken Griffin Flags AI Bubble Risks<\/h2>\n<p>In a high-profile interview at Citadel\u2019s annual Future of Global Markets Conference, <strong>Citadel<\/strong> CEO <strong>Ken Griffin<\/strong> warned that the current frenzy surrounding Artificial Intelligence has pushed valuations into bubble territory. Griffin noted that while the technology is transformative, the market has likely &quot;gotten ahead of itself,&quot; drawing parallels to the dot-com era and the railroad boom.<\/p>\n<p>Despite the bubble warning, Griffin remains bullish on the long-term impact of AI, describing the current era as a &quot;golden age of entrepreneurial activity.&quot; He revealed that <strong>Citadel<\/strong> has already seen massive productivity gains, including an AI agent capable of completing <strong>eight weeks<\/strong> of Ph.D.-level research in just <strong>two hours<\/strong>. However, he cautioned that the &quot;sorting of winners and losers&quot; will be a decades-long process rather than a short-term sprint.<\/p>\n<h2>Market Impact and Sector Volatility<\/h2>\n<p>The dual news of potential rate hikes in Australia and skepticism from one of Wall Street&#39;s most successful hedge fund managers has triggered a defensive shift in global markets. Shares of major AI infrastructure players like <a href=\"https:\/\/stockmarketwatch.com\/stock\/NVDA\" data-internallinksmanager029f6b8e52c=\"15\" title=\"stock: NVDA\">Nvidia<\/a> (<a href=\"\/stock\/NVDA\">NVDA<\/a>) and <a href=\"https:\/\/stockmarketwatch.com\/stock\/MSFT\" data-internallinksmanager029f6b8e52c=\"18\" title=\"Stock: MSFT\">Microsoft<\/a> (<a href=\"\/stock\/MSFT\">MSFT<\/a>) have faced increased scrutiny as investors weigh Griffin&#39;s comments against the backdrop of massive capital expenditure.<\/p>\n<p><em>Market participants are increasingly wary of &quot;overbuilt financing&quot; in the AI sector,<\/em> particularly following a selloff in specialized firms like <strong>CoreWeave<\/strong>, where bond yields recently spiked above <strong>16%<\/strong>. In Australia, the hawkish pivot by the RBA has supported the Australian Dollar (AUD) while putting downward pressure on domestic equities as the prospect of a fifth rate hike this year looms.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways RBA Deputy Governor Andrew Hauser warns that the Australian inflation outlook is &quot;worse than forecast,&quot; keeping a potential 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