RBA Warns Inflation Remains Too High, More Rate Hikes Loom

The Reserve Bank of Australia (RBA) has issued a warning that inflation in Australia remains too high, and further interest rate hikes may be needed to bring it under control.

RBA governor Michele Bullock said underlying inflation had evolved broadly as expected since May, but added that it is still too high. She warned that the labour market had eased somewhat and demand growth had been moderating, but further easing in demand was needed to bring inflation sustainably back to target.

The warning comes as oil markets continue to be mired in volatility, with global benchmark Brent crude falling back below US$90 a barrel. The recent re-escalation in the conflict between the US and Iran has left the market exposed to repeated cycles of escalation and de-escalation, which is likely to keep oil prices elevated in the short term.

Ahead of crucial inflation data release on Wednesday, Bullock said that addressing Australia's slow productivity growth was out of the Reserve Bank's control. However, business investment, particularly in new technologies such as artificial intelligence, will be crucial to improving Australians' living standards over the longer term.