RBA says some upside inflation risks are materialising before its next rate meeting

The warning sharpened.

Reserve Bank of Australia Governor Michele Bullock said Friday that some upside inflation risks identified in August now appear to be materialising. The Monetary Policy Board meets again in just over a week.

Global cost pressures have increased, the statement says. The Middle East conflict, the AI boom and extreme weather are putting upward pressure on energy, agricultural and technology prices. Firms are passing higher input costs through to customers. Bullock said inflation could prove more persistent and require a stronger policy response if those effects become embedded in price and wage decisions.

The Board has raised the cash rate by 75 basis points this year. Bullock said the full effects have yet to be felt. Inflation has run around or slightly above 3.5 percent over the past year, against a target range of 2 to 3 percent, while unemployment stands at 4.5 percent.