Australia's central bank is prepared to raise interest rates if necessary to curb inflation, according to Reserve Bank of Australia (RBA) Governor Michele Bullock. Her comments on Thursday emphasized the bank's commitment to controlling inflation, even as core inflation remains elevated.

In a speech delivered in Armidale, Bullock underscored that the RBA's board is closely monitoring inflation risks after recently deciding to keep interest rates unchanged. The central bank projects that core inflation, which stood at 3.9% last quarter, will gradually decline to within its 2% to 3% target range by late 2025.

"I understand that raising rates may not be popular, but persistent high inflation is far more detrimental. It affects everyone negatively," Bullock stated.

Since November, the RBA has maintained its policy rate steady at 4.35%, up from the pandemic low of 0.1%. This level is considered restrictive enough to achieve the inflation target while supporting employment.

Despite this, markets still anticipate a 46% chance that the RBA might start reducing rates in November, with a December rate cut nearly fully priced in.

Bullock's speech also addressed economic opportunities and challenges in regional Australia, highlighting that investments in renewable energy could provide significant economic benefits, including job creation and increased income for landholders. However, she noted that increased weather volatility and rising temperatures present difficulties for farmers and local communities.

Paraphrasing text from "Reuters" all rights reserved by the original author.