RBA Tightens Policy as Inflation Remains Elevated
The Reserve Bank of Australia (RBA) has announced a hawkish tightening of monetary policy, warning that inflation remains too high and several upside risks have materialised. Governor Michele Bullock said the Board would raise rates again if necessary, but still hopes to bring demand and inflation down without triggering a recession.
The RBA pointed out that global energy prices are well above their August forecasts due to the Middle East conflict. This has contributed to stronger-than-expected inflation outcomes, with short-term inflation expectations remaining elevated.
Bullock stated that current inflation is driven mainly by domestic capacity pressures and price pressures will likely last longer than expected. The RBA is also monitoring building inflation risks from the AI investment boom.