RBA Warns of Inflation Risks Amid Energy Price Worries

Australia's central bank has expressed concerns that inflation risks may be materialising. The Reserve Bank of Australia (RBA) Governor Michele Bullock said that upside risks to inflation could be a result of energy prices staying high and excess demand in the economy.

Bullock pointed out that the conflict in the Middle East has had a longer-lasting impact on energy prices than initially expected, and there is still excess demand in the economy. She noted that unemployment between 4.5% to 5.0% could help restrain inflation, but suggested some rise might be needed from the current level of 4.5%.

RBA Assistant Governor Sarah Hunter also reiterated that interest rates might have to rise for a fourth time this year to ensure inflation is reined in. The RBA has increased the cash rate by 75 basis points since February, taking it back to a post-pandemic high of 4.35%. However, core inflation remains at 3.6%, above the RBA's target range of 2% to 3%.