RBA Warns Inflation Too High, Further Hikes Possible Amid Global Oil Price Volatility
The Reserve Bank of Australia (RBA) Governor Michele Bullock has warned that underlying inflation remains too high, despite easing somewhat since May. In a speech to the Anika Foundation Fundraising Lunch in Sydney, she stated that further interest rate hikes may be needed to bring inflation sustainably back to target.
According to Bullock, the labour market had eased somewhat and demand growth had been moderating after three rate rises since February. However, she emphasized that 'further easing in demand is needed' to achieve this goal.
The RBA Governor also pointed out that the recent re-escalation of the conflict between the US and Iran has left oil prices likely to stay elevated in the short term. The Treasury's briefing warns that the breakdown of a memorandum of understanding between the two sides shows the underlying dispute over control of the Strait of Hormuz remains unresolved.
Bullock stated that Australians are still suffering from diminished living standards due to successive negative supply shocks since the pandemic, worsened by weak productivity growth. She added that reversing this is crucial for improving living standards in the long term.