RBA Governor Bullock says a key question is whether monetary policy tightening so far will be sufficient to return inflation to target within a reasonable timeframe, adds remain committed to the mandate of delivering price stability and full employment

Says: Recognise that higher interest rates can be challenging, but cannot allow elevated inflation to persist. Monetary policy operates with a lag, and the full impact of recent rate hikes has yet to be felt on domestic activity. The Middle East conflict has had a relatively limited impact on economic activity so far. Household spending growth has been slowing only gradually. A further period of subdued aggregate demand growth is required to ease capacity pressures. Inflation is therefore likely to exceed the August base-case forecast. Oil and related prices have risen sharply again and will contribute materially to inflation. Short-term inflation expectations remain elevated. Domestic capacity pressures continue to contribute to inflation. The labour market appears slightly tighter than previously assessed.