RBA Governor Warns of Rising Inflation Concerns Ahead of Potential Rate Hike

The Reserve Bank of Australia (RBA) is increasingly likely to raise interest rates in September due to rising inflation concerns, according to RBA governor Michele Bullock.

Bullock told a parliamentary hearing that developments since the bank's last meeting in August suggest that some upside risks to inflation are materializing. She noted that while growth in the Australian economy is slowing, the risks from higher inflation are becoming evident.

The RBA has been warning about the potential for inflation to come in above its forecasts, which could lead to a rate hike. Westpac chief economist Luci Ellis agrees, predicting a September rate rise after bringing forward her previous forecast from November.

Bullock attributed the rising inflation to various factors, including sharply increased oil prices due to the Iran war, which is adding directly to inflation. She said that despite some businesses delaying passing on costs to consumers, they could no longer avoid it and would eventually have to pass these costs on.