RBA Sounds Alarm on Rising Inflation Risks Amid Global Pressures

The Reserve Bank of Australia (RBA) has sounded a warning about rising inflation risks. Governor Michele Bullock pointed to renewed energy-price pressure, the global AI investment boom, and persistent domestic capacity constraints as factors contributing to this trend.

Bullock stated that inflation remains too high despite three increases in the cash rate this year. The RBA has lifted rates by a combined 75 basis points during 2026, taking the cash rate target to 4.35%. The latest inflation data show Australia's Consumer Price Index rose 3.5% in the 12 months to July.

The RBA is concerned that increases in oil and related prices due to the Middle East conflict could become embedded in broader price and wage-setting behaviour, making inflation more persistent. Additionally, the global AI investment cycle is pushing up prices for technologies where supply remains constrained.