RBA warns inflation risks are increasing as it eyes fourth rate hike

The risk of inflation overshooting the Reserve Bank’s forecast is growing, putting households on notice for potentially more interest rate hikes.In an address to the House of Representatives Standing Committee on Economics on Friday, RBA governor Michele Bullock warned it could be several years until inflation returns to the bank’s 2-3% target range.The longer inflation remains higher than this, the more monetary policy tightening – rate hikes – will be needed to balance out the economy, she warned.“Inflation is too high; we are focused on getting it back down and making sure that it does not become embedded into price and wage-setting decisions,” she explained.The bank’s latest outlook was published in the August statement on monetary policy and brought forward the timeline for inflation returning to the midpoint of the target range from mid 2028 to late 2027.Since then, inflation data from the Australian Bureau of Statistics has revealed underlying inflation did not peak in June as both the RBA and Treasury expected, instead holding steady at 3.6% over the 12 months to July. With August data not set to be released until the end of this month, the RBA’s monetary policy board will ...