RBA Hawk Hunter Targets Middle East Inflation at Sydney Forum
0h ago|4 min read1Standard
Fazen Markets Editorial Desk
Collective editorial team · methodology
Fazen Markets Editorial Desk
Collective editorial team · methodology
Trades XAUUSD 24/5 on autopilot. Verified Myfxbook performance. Free forever.
Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The majority of retail investor accounts lose money when trading CFDs. Vortex HFT is informational software — not investment advice. Past performance does not guarantee future results.
Reserve Bank of Australia Assistant Governor Sarah Hunter will address inflation risks stemming from the Middle East conflict at the Bloomberg Forum for Investment Managers in Sydney on 18 May 2026. The speech follows three consecutive 25 basis point official cash rate increases this year, lifting the benchmark to 4.60%. Markets are alert for hawkish signals on how sustained energy price shocks could necessitate further monetary tightening to return inflation to the 2-3% target band.
Geopolitical events have historically triggered significant oil supply disruptions, directly impacting global inflation. The 1973 oil embargo caused crude prices to quadruple, fueling stagflation in developed economies. More recently, the 2022 invasion of Ukraine pushed Brent crude above $139 per barrel, contributing to the global inflationary spike that central banks are still combating.
The RBA's current tightening cycle began in May 2022, with the cash rate rising from 0.10% to a peak of 4.35% in November 2023. After pausing for seven months, the bank resumed hikes in February 2026 as inflation proved more persistent than expected. Core inflation remains at 3.8% year-on-year, well above the target band.
The specific catalyst for this address is renewed Middle East tensions disrupting shipping lanes and energy production. Attacks on tankers in the Red Sea have increased shipping costs by approximately 150% since December 2025, while Brent crude has gained 18% year-to-date to trade near $98 per barrel. These developments create direct second-round inflation effects that concern policymakers.
Three consecutive 25 basis point rate increases in 2026 have brought the RBA's official cash rate to 4.60%, the highest level since December 2008. Financial markets are currently pricing a 68% probability of another 25 basis point hike at the July 2026 meeting.
Energy price increases present substantial inflationary pressure. Brent crude oil has risen from $83.20 on 31 December 2025 to $98.15 on 17 May 2026, an 18.0% increase. The Bloomberg Commodity Index has gained 12.3% year-to-date, outpacing the 6.2% gain in the MSCI World Index.
Supply chain disruptions are measurable through shipping costs. The Drewry World Container Index has surged to $3,842 per 40-foot container, up from $1,542 in December 2025. This 149% increase directly impacts import costs for Australian businesses and consumers.
Domestic inflation metrics remain elevated. The monthly CPI indicator showed headline inflation at 3.6% in March 2026, with the more persistent trimmed mean measure at 3.8%. This compares to the US core CPI of 2.8% and the Eurozone's 2.4%, indicating Australia's inflation challenge is more pronounced.
Energy sector equities stand to benefit from sustained higher oil prices. ASX-listed producers Woodside Energy (WDS) and Santos (STO) have outperformed the broader index, gaining 22% and 19% year-to-date respectively versus the ASX 200's 4.1% return. These companies could see further upside if conflict persists.
Conversely, transportation and consumer discretionary sectors face headwinds. Airlines Qantas (QAN) and Virgin Australia, along with logistics provider Brambles (BXB), face margin compression from higher fuel and shipping costs. Consumer discretionary stocks like Wesfarmers (WES) may experience demand destruction as households allocate more spending to essential energy costs.
A counterargument exists that current price pressures may prove transitory. The International Energy Agency forecasts increased non-OPEC production could add 1.7 million barrels per day to global supply in second-half 2026, potentially easing price pressures without additional RBA action. Market positioning shows hedge funds increasing short positions on rate-sensitive technology stocks while going long energy futures.
The next major catalyst is the Q1 2026 CPI data release on 24 July, which will provide critical evidence of whether inflation is responding to current policy settings. This data arrives one week before the 4 August RBA board meeting, making it decisive for policy direction.
Technical levels for the Australian 10-year government bond yield show resistance at 4.50%, a breach of which would signal markets pricing additional tightening. Support sits at 4.25%, representing the expectation of a policy pause.
Shipping cost data from the Drewry World Container Index, published weekly, will provide timely indicators of supply chain inflation pressure. Any sustained increase above $4,000 per container would likely maintain hawkish RBA rhetoric regardless of other economic data.
The conflict disrupts global oil supplies and shipping routes, increasing energy and transportation costs directly. Australia imports approximately 90% of its crude oil needs, making consumer petrol prices highly sensitive to global benchmarks. These increases then feed into broader inflation through higher production and distribution costs across the economy.
The Reserve Bank of Australia aims to keep consumer price inflation between 2-3% on average over the medium term. This target is measured by the percentage change in the Consumer Price Index, with particular focus on the trimmed mean measure that excludes volatile items to identify underlying inflationary trends.
The RBA has implemented three consecutive 25 basis point interest rate increases in 2026, following meetings in February, March and May. This brought the official cash rate from 4.10% at the end of 2025 to the current level of 4.60%, representing the most aggressive tightening pace since the initial hiking cycle began in 2022.
RBA hawkishness persists as Middle East energy shocks threaten to prolong Australia's inflation battle beyond peer economies.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
Vortex HFT is our free MT4/MT5 Expert Advisor. Verified Myfxbook performance. No subscription. No fees. Trades 24/5.
Position yourself for the macro moves discussed above
Start TradingSponsored
Open a demo account in 30 seconds. No deposit required.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.