The Reserve Bank of Australia cautioned that expanding hostilities in the Middle East have pushed global energy costs beyond August projections and could trigger stagflationary pressures. The board noted that new upside risks to inflation are emerging, meaning it will not rule out further increases to the cash rate to return price levels to the target band permanently.

The central bank raised its benchmark interest rate by 25 basis points to 4.60% on Sept. 29, reaching a 15 year high to combat sticky inflation. This move, which matched analyst forecasts, pushed the Australian dollar to $0.7026. Policymakers stated that additional monetary tightening remains necessary to restore targets within an acceptable timeframe.