Inflation is running at a brisk pace and is set to pick up further in the coming quarters; supply disruption has been exacerbated by the war in Ukraine and recent floods in Queensland and New South Wales, which will boost fuel and food prices, respectively. The RBA has signalled and displayed a willingness to tolerate an overshoot of their inflation target. In part, this is because raising rates in response to inflationary supply shocks is counterproductive to the RBA's broader policy objectives of full employment and the welfare of Australians.
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Topics: Australia, Budget, Reserve Bank