RBA Warns Inflation May Rise Further Amid Oil Price Surge
RBA Governor Michele Bullock warned that underlying inflation in Australia remains too high and may rise further due to higher oil prices linked to the Iran conflict. She noted that it is uncertain whether the three interest rate hikes this year will be sufficient to bring price growth back to the Reserve Bank's 2%-3% target.
Bullock stated that the full impact of these rate hikes has yet to flow through the economy, and further easing in domestic demand may be needed. She also mentioned that the labor market needs to cool down further, and underlying inflation could rise as higher oil prices feed into broader costs.
The Governor emphasized that the Reserve Bank is prepared to act as required to achieve its mandate, including increasing the cash rate if necessary. The recent surge in oil prices highlights the uncertainty from the Middle East war, with more businesses indicating they intend to pass higher costs on to consumers.