RBA Warns Inflation May Persist Amid Rising Oil Costs and AI Demand
The Reserve Bank of Australia's (RBA) Governor Michele Bullock warned that inflation may stay higher for longer, despite the nation's central bank facing pressure to bring price growth under control. Speaking in front of Parliament in Canberra, Bullock stated that 'developments since [the August meeting] suggest that although growth in the Australian economy is slowing, some of these upside risks to inflation appear to be materialising.'
The governor cited continued tensions in the Middle East as a major contributor to higher oil and shipping costs, driving up prices. Additionally, she pointed out the rapid growth of artificial intelligence, which is putting pressure on prices for AI-related technologies.
Bullock's comments come ahead of the monetary board's scheduled meeting on September 28-29, with markets pricing in a 93% probability of a rate hike at the September meeting. The RBA has already raised the official cash rate (OCR) three times this year, lifting rates to their current level of 4.35%. The bank will not consider cutting rates again until inflation is back within the target range of 2-3%.