Reserve Bank of Australia Governor Bullock told a parliamentary committee firms
are increasingly forming a view that high inflation may not fall back below 3%.
She said businesses are asking whether inflation will decline, which is a
concern. Bullock reiterated the RBA’s dual mandate of full employment and a
2%-3% inflation target and warned the longer inflation stays above target, the
greater the risk that inflation expectations begin to adjust upward. She said
inflation risks are tilted to the upside, driven partly by concerns over
expectations and by incoming supply shocks — including from the Middle East and
weather-related events — alongside demand-side pressures.
