RBA Assistant Governor Hunter says risk of inflation expectations drifting higher is elevated, and the Middle East conflict is a clear external shock, adds recent rise in oil prices is particularly challenging to navigate

Says: Shock has come against a backdrop of elevated capacity constraints and domestic cost pressures, and their research suggests pass-through will be faster and more extensive. Expects firms will pass through higher oil prices relatively quickly and noted their forecasts assume that the Gulf conflict gets resolved soon. Sees inflation risk on both the upside and downside.