Michele Bullock struck a cautious tone last week in the immediate aftermath of the US-Israeli strikes on Iran. But alarm bells will be ringing at Martin Place today ahead of the Reserve Bank’s interest rate decision next Tuesday.
The latest ANZ-Roy Morgan Consumer Confidence survey, released on Tuesday morning, unsurprisingly suggests households believe the war in Iran is about to derail the domestic fight against inflation. Inflation expectations hit a three-year high, with the survey capturing Australians’ views in the days after the strikes.
As ANZ economist Madeline Dunk said in a note, “inflation expectations recorded their largest weekly rise since we began measuring the series in 2010”.
“This takes inflation expectations to its highest level since November 2022,” she said, noting that since the conflict in the Middle East escalated last week, WTI oil futures are up by about 30%.
