Australia's Bullock Warns of Inflation Risks Amid Strong Domestic Demand

Reserve Bank of Australia Governor Michele Bullock sounded an inflation warning on Tuesday, citing high energy prices and strong domestic demand as key contributors to price pressures.

Bullock pointed out that the prolonged Middle East conflict has led to higher energy costs and excess demand in the economy. She noted that unemployment rates between 4.5% and 5.0% could help bring down inflation, as it would reduce domestic demand and alleviate supply shortages.

The governor clarified she was not signaling an interest rate hike during next week's RBA meeting but rather highlighting upside risks to inflation. Bullock has repeatedly expressed concerns that inflation may remain too high for too long and become embedded in price-setting behavior.