The Australian share market has slid lower after hawkish comments by a Reserve Bank official gave fresh hints a Melbourne Cup day rate hike was a real possibility.
The benchmark S&P/ASX200 index was down 16.4 points, or 0.19 per cent, at 8800.5 at lunchtime on Wednesday, while the broader All Ordinaries had slipped 18.5 points, or 0.21 per cent, to 8925.7.
RBA deputy governor Andrew Hauser told an investment conference in Sydney hours earlier that the inflation outlook was "materially worse" than the central bank had forecast and businesses were beginning to view 3.5 per cent inflation as the "new normal".
Betashares chief economist David Bassanese said the RBA's recent comments indicated that it had lost patience on inflation and was now willing to risk a recession to bring it down.
The market's pricing of a 40 per cent likelihood that the RBA would raise interest rates at its next meeting on November 3 was too low, Mr Bassanese said.
The Australian dollar climbed to a three-week high on Mr Hauser's remarks, buying 70.21 US cents, from 69.73 US cents at 5pm on Tuesday.
Six of the ASX's 11 sectors were lower early Wednesday afternoon and four were higher, with consumer discretionaries basically flat.
The tech sector was the biggest loser, falling 3.7 per cent amid a plunge by data centre operator NextDC.
Shares in the Brisbane-based company slumped 38.7 per cent to an eight-year low of $5.63 after announcing that power supply issues at its flagship site in Melbourne would cost it $140 million in lost earnings.
In the mining sector, BHP dropped 1.1 per cent, Rio Tinto fell 1.4 per cent and South32 slipped 2.2 per cent.
Goldminers Northern Star and Westgold were up 3.0 and 3.4 per cent, respectively, on quarterly production updates.
But most of their peers were in the red, with Evolution down 1.1 per cent, Newmont falling 1.6 per cent, and West African Resources dropping 1.0 per cent.
The big four banks were mostly higher, with NAB climbing 0.8 per cent, Westpac adding 0.2 per cent and CBA edging up 0.1 per cent.
ANZ was the outlier, dipping 0.2 per cent.