Implied odds for a Melbourne Cup day rate hike have lengthened since jobs figures for September came in softer than expected.
But hawkish remarks from RBA deputy governor Andrew Hauser on Wednesday reiterated that the November meeting was still live.
Mr Hauser said the bank had "hard choices" ahead, as it grappled with a worsening inflation outlook as well as a softening jobs market.
"Do you do more to tackle higher inflation, recognising that that means weaker activity, weaker labour market?" he said at a Citi bank conference in Sydney.
"Or do we hold our horses to protect the labour market ... but accept the risks in so doing that this upside inflation risk embeds, and that becomes more expensive to deal with. Those are hard choices."
Mr Hauser said there was evidence higher inflation expectations were becoming embedded as the Middle East supply shock dragged on.Â
He and governor Michele Bullock have repeatedly said that such a scenario would be unacceptable, because it then makes it harder for the bank to get price growth down long term, imposing even greater costs on the economy.
An increasing share of businesses thought that inflation of around 3.5 per cent was the new normal, Mr Hauser said.
"That is the central banker's nightmare. We can't allow expectations to shift away from the target," he said.Inflation data for the September quarter, due out on October 28, will be pivotal to the RBA board's decision.
With two months of data already in, it was clear that quarterly underlying inflation was set to print higher than the bank had assumed in August, Mr Hauser said.
And a lot of the oil price rise caused by the latest escalation in the Middle East conflict had yet to be passed on by businesses, who were worried that they would lose customers if they sought to recover their costs.
"A big part of our forecast discussions at the moment is how large that lump, if you like, that ostrich egg of oil price rises coming through in the next couple of years, is going to be. It could be quite substantial," Mr Hauser said.
Market services inflation, which is closely watched by the RBA as it relates to domestic capacity pressures and is particularly sticky, was also relatively strong.
While economists said the rise in the jobless rate to 4.7 per cent on Thursday took some pressure off the RBA to raise rates again, Mr Hauser said unemployment was still relatively low compared to international and historical standards.
"It's been one of the great successes of the post-COVID period ... that the labour market has performed as well as it has. No lost job is one to celebrate," he said.
"(But) we need to see some easing in the economy.
"Whether it goes to five (per cent), whether it goes to some other number, that's a debate we're having in the context of our forecasts at the moment, and you'll see our answers to that in a week or two."
