Bullock Warns Inflation Risks Materializing as RBA Considers Further Rate Hikes

Australia's central bank chief, Michele Bullock, warned that inflation risks are materializing due to several factors. The Middle East conflict and the AI boom are putting upward pressure on prices.

Bullock stated that these upside risks to inflation appear to be materializing despite slowing growth in the Australian economy. Oil prices have increased sharply again, adding directly to inflation.

The Reserve Bank of Australia (RBA) held interest rates steady for a second meeting in August but warned that rates could go higher as it singled out several risks to inflation, including the Middle East war and extreme weather events.

Bullock said the RBA is considering whether three rate hikes this year would be enough to bring inflation back to the 2-3% target. She noted that a tight labour market could amplify the pass-through of rising input costs into prices.