Bullock Warns Inflation Too High Ahead of Next RBA Rate Decision

Reserve Bank of Australia Governor Michele Bullock has issued a blunt warning that inflation in Australia is too high, just days before the bank's board considers lifting interest rates for the fourth time this year.

Bullock stated that inflation is too high and that the Reserve Bank is focused on bringing it back down to target. She pointed out that several risks to the inflation outlook previously flagged by the Reserve Bank are materializing, particularly the prolonged period of elevated fuel prices caused by the Middle East conflict.

The conflict has led to a sharp increase in oil and related prices, which will add directly to inflation, Bullock said. The boom in AI-related infrastructure is also exerting inflationary pressure by adding demand for labor in key economic sectors and driving up prices for some AI-related technologies, she added.

Following Bullock's comments, Westpac revised its interest rate forecast, expecting the Reserve Bank to lift rates higher this month, with a risk of a follow-up hike. The RBA monetary policy board has already increased the benchmark cash rate by 0.75 percentage points in three separate increases this year to reduce inflation.