RBA Flags Growing Inflation Fears Amid Middle East Conflict and AI Boom

RBA Governor Michele Bullock has expressed concerns about growing inflation fears in Australia. The central bank is considering a fourth interest rate hike this year, with expectations of two more increases by March 2027.

Inflation risks have increased due to factors such as the Middle East conflict, AI boom, and extreme weather events, which have driven up prices for energy, food, and tech. Bullock noted that oil prices remain high at over $US104 a barrel, adding pressure on inflation.

The RBA is concerned about businesses passing on costs to consumers, making inflation more persistent. The AI boom has pushed up demand, but the bank's forecasts for global growth have been repeatedly surprised on the upside.