RBA Governor Michele Bullock signaled that the Reserve Bank may raise interest rates before its March 17-18 meeting, citing core inflation persistently above the 2-3% target range and Middle East energy supply shocks as key risks. Speaking at a Sydney business summit, Bullock stated the central bank is not committed to waiting for first-quarter data, emphasizing inflation and employment remain 'tight' and that the board will 'actively look' at whether 'it needs to move more quickly.'

Bullock warned that rising energy prices from the U.S.-Iran conflict could further fuel Australian inflation, noting that 'with a supply shock occurring in a situation where we already have high inflation' there's a risk inflation expectations could rise. The RBA previously hiked rates in February to combat a late-2025 inflation resurgence, with core inflation now expected to remain elevated longer than initially projected.

While Bullock acknowledged the RBA could have responded more aggressively to inflation, she stressed inflation poses the greater near-term risk to the economy. The central bank is currently prioritizing inflation control over employment, with Bullock noting AI's immediate impact on jobs remains minimal for the next year despite potential long-term sector disruptions.

The March meeting now takes on heightened significance as the RBA balances inflation containment against economic growth concerns amid geopolitical energy volatility.