RBA Flags Rising Inflation Risks Ahead of Key Meeting

Australia's central bank is warning of rising inflation risks due to the Middle East conflict and an AI-driven data center building boom, which are pushing prices up ahead of its next meeting.

Reserve Bank of Australia Governor Michele Bullock told lawmakers that both factors have moved in a more inflationary direction since August, even as the country's growth cools. The labor market remains tight, keeping wage growth and services prices sticky, according to Bullock.

The RBA kept its policy rate at 4.35% in August but is now considering further tightening due to the increased inflation risks. Markets are predicting a 93% chance of a hike to 4.6% at the September 28-29 meeting and a peak around 4.85% by early 2027.