In the minutes of the RBA's March board meeting released on Tuesday, the bank recognized that increasing prices of energy and other commodities including food would continue to drive up headline inflation in Australia from its current 3.5 percent.
A report from the Australia and New Zealand Banking Group Limited (ANZ) released last week said that inflation in Australia could surpass 5 percent by mid-2022 over "higher petrol and food prices".
"In year-ended terms, underlying inflation was expected to increase further over coming quarters before moderating as supply problems are resolved," read the minutes, adding that the situation in Ukraine and the associated increase in energy prices have created additional uncertainty about the inflation outlook.
They said that this has led to "high international shipping rates" that was creating cost pressure for firms across many industries.
The minutes reaffirmed the resilience of the Australian economy, noting strong growth in Australia's housing market and a tight labor market, which is expected to prompt a pickup in wage growth.
The bank has maintained that it would not lift interest rates until wage growth is sustainably in the 2 percent to 3 percent range.
"Members observed that wages growth had picked up, but at the aggregate level was only around the relatively low levels prevailing prior to the onset of the pandemic," the minutes read.
Latest comments