Middle East Conflict Drives Up Oil Prices, Worsens Inflation Risk

The ongoing conflict in the Middle East has had far-reaching consequences for Australians, with Reserve Bank of Australia (RBA) Governor Michele Bullock stating that it has made them poorer. The conflict is expected to drive inflation upwards due to a spike in oil prices.

Bullock pointed out that supply shocks, such as the current one in the Middle East, have worsened the trade-off between inflation and employment. This means that efforts to control inflation may come at the cost of higher unemployment or lower economic growth.

The RBA's Monetary Policy Board will next meet on September 30 to consider interest rates. The board has kept the key interest rate at 4.35 percent since June, but Bullock hinted that this may change in light of rising inflationary pressures.