The next move in the Reserve Bank of Australia’s cash rate is likely to be down, but the timing remains uncertain, according to the latest NAB Economics RBA Watch.
09 June 2026 | 3 min read
10 March 2026
Global energy prices are rising, adding new pressure to inflation.
Higher fuel and power costs will flow through to households and businesses.
“Energy shock” means higher inflation and slower growth, further clouding the outlook for interest rates.
Rising global energy prices could make it harder for central banks to bring inflation under control and increase the risk that interest rates stay higher for longer, according to NAB Chief Economist Dr Sally Auld.
Oil prices have jumped amid renewed conflict in the Middle East and disruptions to global supply chains. While Australia is not directly involved, higher energy costs are flowing through to fuel, electricity and transport prices, lifting costs for households and businesses.
NAB Chief Economist Sally Auld said in her Economic Comment note on Monday, that the developments amount to a classic “energy shock” - a sudden rise in global prices that is difficult for central banks to offset.
“Energy prices feed into almost every part of the economy,” Dr Auld said. “When oil and gas prices rise quickly, it pushes up costs right across the supply chain.”
The concern for policymakers is that higher energy costs could reignite inflation, even as domestic demand cools as households face higher prices. Because this inflation is driven by global factors outside Australia’s control, it presents a tougher challenge for the Reserve Bank of Australia (RBA).
“With inflation already above target, new cost pressures are a challenge for the RBA,” Dr Auld said.
With this new shock meaning higher inflation but also slower growth, NAB’s forecast of a 25bp rate hike to 4.1% in May remains unchanged.
Want to hear more?
Dr Sally Auld spoke with ABC’s Radio National on the energy shock and what it means for Australia.
