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2026-09-18 09:24:12
[RBA Governor: Upside Risks to Inflation Emerging, Rate Hike Path Faces Test] 1. Reserve Bank of Australia (RBA) Governor Bullock testified before lawmakers on Friday that some of the upside risks to inflation previously highlighted by policymakers are gradually materializing, with the Middle East conflict and the ongoing AI boom continuing to exert upward pressure on prices. 2. Bullock pointed out that one of the key issues at this month's policy meeting is whether the three rate hikes implemented this year are sufficient to bring inflation back to the target level within a reasonable timeframe. The RBA kept interest rates unchanged at 4.35% for the second consecutive time at its August meeting, specifically highlighting the Middle East conflict and the global data center investment boom as major inflation risks. Since then, both factors have shown a tendency to push up inflation. 3. She stated that the latest developments indicate that although Australian economic growth is slowing, some upside risks to inflation appear to be emerging. The economy is slowing as expected, but the labor market remains tight. She warned that to reduce inflation, aggregate demand needs to experience a period of weak growth. 4. Market expectations indicate a 93% probability that the Reserve Bank of Australia will raise interest rates to 4.6% at its September 28-29 meeting, with rates projected to rise to 4.85% by early 2027.
