RBA Flags Potential for Further Rate Hikes Amid Ongoing Oil Market Volatility

The Reserve Bank of Australia (RBA) governor Michele Bullock warned that underlying inflation is still too high, despite easing somewhat since May. The RBA has raised interest rates three times since February to combat inflation, but further rate hikes may be needed to bring it under control.

Bullock said in a speech that the labour market had eased somewhat and demand growth was moderating, but more easing is required to bring inflation sustainably back to target. The RBA board is prepared to act as necessary to achieve its mandate, including increasing the cash rate further if needed.

The warning comes as oil markets remain volatile due to tensions between the US and Iran over control of the Strait of Hormuz. Treasury has warned that the conflict poses a substantial threat to global inflation. Oil prices have fluctuated in recent days, with Brent crude falling below $US90 a barrel on Tuesday.