Reserve Bank of Australia flags possible inflation rate hike

• The Reserve Bank of Australia suggested interest rates may need to rise further to combat persistent inflation.
• The statement follows three rate hikes this year amid a global oil crisis that has pushed headline inflation to 4%.
• The central bank is aiming to manage economic supply shocks while guiding inflation back to its 2–3% target band.

The Reserve Bank of Australia has signalled that interest rates may need to be raised further to return inflation to the target range amid an ongoing global oil crisis.

The warning comes after headline inflation reached 4% in May, marking the tenth consecutive month above the central bank's target band of 2–3%.

"All else equal, a persistently higher outlook for inflation suggests that interest rates should be raised," said Reserve Bank of Australia Assistant Governor Sarah Hunter.

The central bank noted that returning inflation to the midpoint of its target by the end of 2027 would require an estimated 37,565 job losses as the unemployment rate rises from 4.4% to 4.6%.

A further 25-basis point increase would push the official cash rate to a 15-year high of 4.6%.

The policy discussion follows a 6% weekly surge in Brent crude oil prices to $US76 a barrel after recent military strikes in the Strait of Hormuz disrupted global shipping lanes.