The comments come about six weeks into the oil shock, which the has pushed up prices at the bowser, lifted inflation and hit both consumer and business sentiment in Australia.
“It’s obvious that inflation is going up in the short term, and people are very conscious of that,” Hauser (pictured right) said. “We are almost wholly reliant on imports for oil and we are the highest user of diesel per capita in the world.”
The cash rate has already risen twice this year, to 3.85% in February and then to 4.1% in March, according to the release. Hauser said there was “not much monetary policy can do” about near-term inflation spikes, with the central bank instead using rates to limit longer-term risks.
He said the key question for the Reserve Bank was how consumer behaviour would feed into the data, and warned of “a big income shock” if activity slowed in line with weakening confidence.
Consumer confidence has fallen since the start of the war, while mortgage repayments and property market resilience face added strain. April’s drop in the Westpac–Melbourne Institute Consumer Sentiment Index was the steepest monthly decline since the onset of the pandemic.