US-Israel attack Iran live updates<\/a>: For the latest news on the war in the Middle East read our blog.<\/p>\n Economists have warned that Australian petrol prices could rise by 40 cents a litre in coming weeks, after the price of a barrel of Brent crude oil jumped by 9 per cent yesterday.<\/p>\n But Ms Bullock said events were moving rapidly and there were different ways the war could play out, with RBA staff closely monitoring the situation.<\/p>\n Economists warn Middle East war to spike oil<\/a><\/p>\n The average household could see $14 added to their weekly petrol bill, a prominent economist has warned.<\/p>\n “Events in the Middle East are a timely reminder that in this world of geopolitical uncertainty, things can change quickly,” she said at an AFR Business Summit in Sydney early this morning.<\/p>\n “It’s too early to say what the impact will be \u2026 [RBA] staff will take some time to make sense of what it could mean for inflation here.<\/p>\n “A supply shock could, for example, add to inflation pressures and the potential implications for inflation expectations are something we are very alert to.<\/p>\n “But at the same time, a prolonged impact on energy markets could have adverse effects on global economic activity and result in downward pressure on inflation. It is not obvious how this might play out.<\/p>\n “So as much as I know the public would like more certainty about the direction of interest rates, it would be wrong for us to pretend to have greater certainty than we do.”<\/p>\n Michele Bullock takes questions after the RBA kept official interest rates on hold at its December 2025 meeting. (AAP: Dan Himbrechts)<\/p>\n Read more about the US-Israel war with Iran:Unemployment would be higher if RBA had lifted rates more aggressively<\/p>\n Separately, RBA assistant governor (economic) Sarah Hunter delivered a speech<\/a> overnight in Norway at a central banking conference.<\/p>\n Ms Hunter explained to her global central bank colleagues why the RBA had chosen a deliberate strategy, in recent years, of trying to bring inflation down more slowly to keep unemployment as low as possible.<\/p>\n Bullock calls for patience<\/a><\/p>\n Michelle Bullock gives more details on how quickly developments affecting monetary policy have moved since the middle of last year.\u00a0<\/p>\n She said the RBA could have lifted interest rates higher in 2023 and 2024 to bring inflation down faster, but that would have led to much higher unemployment.<\/p>\n Ms Hunter said the RBA had, in fact, run modelling to see what would have happened to unemployment if it had lifted rates as high as those of its central banking peers in recent years.<\/p>\n She said it showed Australia’s unemployment rate would now be well above 5 per cent (it is currently 4.1 per cent<\/a>).<\/p>\n “Unsurprisingly, a sharper increase in interest rates would have reduced the peak level of inflation and increased the speed of subsequent disinflation,” Ms Hunter said.<\/p>\n “We estimate that with this counterfactual path, year-ended trimmed mean [underlying] inflation would have reached the midpoint of the target band (2.5 per cent) by 2025.<\/p>\n “The surprise spike in inflation in late 2025 still occurs, as it is an unexpected shock, with year-ended trimmed mean inflation lifting to be slightly above target at the end of the horizon,” she said.<\/p>\n “But the more contractionary policy path would have caused higher unemployment.<\/p>\n “We estimate that the counterfactual strategy would have caused unemployment to overshoot the level consistent with full employment in 2023.<\/p>\n “From then, the labour market would have continued to weaken through 2024 and 2025, peaking at 5.3 per cent in late 2025.”<\/p>\n Ms Hunter said central banks had used different strategies to bring inflation down in recent years to suit their own economic circumstances.<\/p>\n “Some chose to increase policy rates sharply and slow their economy quickly,” she said.<\/p>\n “The RBA board chose a more gradual increase and more gradual subsequent policy rate decline, while being very mindful that this strategy relies on inflation expectations remaining anchored.”<\/p>\n![\"A](\"https:\/\/www.newsbeep.com\/il\/wp-content\/uploads\/2026\/03\/4ca33bdf1f1e583552811a84e9d30c71.jpeg\")
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