Australians are poorer as a direct consequence of the Middle East conflict’s impact on global commodity prices, the governor of the Reserve Bank of Australia has admitted, warning there is no way out of the economic damage without further pain for households. Speaking after the bank delivered its third consecutive interest rate rise this year, Michele Bullock told reporters the shock to oil, energy and other commodity prices left the country fundamentally worse off, with the trade-off for the economy “much worse”.
“Australians are poorer because of this shock to oil prices and energy prices and all the other commodity prices that are being impacted,” she said. “So we are poorer, and there is no way out of that.”
RBA warns of relentless inflation as global shocks embed higher prices
The Reserve Bank raised the official cash rate by 25 basis points to 4.35 per cent on Tuesday, a decision supported by eight of the nine board members. One member voted to hold rates steady, according to published voting records — the third split decision since votes began being disclosed in July 2025. Bullock stressed that the rate rises already delivered would do nothing to stop fuel-driven inflation over the next six months, describing the price surge as “completely out of our control”. The bank is instead aiming to prevent what it calls “second-round effects” — the risk that firms facing higher costs begin raising prices more broadly, locking in persistent inflation long after the original oil shock fades.
“In many firms that are facing cost pressures, they’re looking to increase prices of their goods and services,” Bullock said. “If left unchecked, higher costs get embedded into price and wage setting decisions. These second-round effects could lead to even higher and persistent inflation, and if so, would require even more tightening in monetary policy to get inflation under control.” The RBA board’s own statement warned that “higher fuel prices are adding to inflation and there are indications that this is likely to have second-round effects on prices for goods and services more broadly”. It said credit remained “readily available to both households and businesses” but that inflation was likely to stay above the 2–3 per cent target band for some time.
Bullock stressed that low-income Australians were bearing the brunt of the crisis. “The people who are most impacted by inflation are the most vulnerable,” she said. “The people on the lowest incomes, they’re the ones who don’t have savings, they don’t have earnings from interest or anything like that … they’re just getting hit by inflation.” Treasury modelling released in March 2026 indicates that a short-term oil price shock could lift the consumer price index by 0.75 percentage points, while a prolonged shock could add 1.25 percentage points. A separate analysis by economists EY found that if the conflict disrupts oil flows through the Strait of Hormuz, Australia’s GDP could be $42 billion lower in 2026, with investment down $54 billion and household consumption falling $70 billion. About 160,000 workers could be temporarily idled in such a scenario.
Bullock acknowledged the bank has “no idea” when the war will end. “When I stood here at March, I think the war was maybe a week or two old and everyone was thinking it’ll be over in a couple of weeks. It isn’t. We’re still here. We still have no idea.” The RBA board’s statement noted that a longer or more severe conflict could force up energy prices further, leaving inflation higher for longer and slowing growth. For households already stretched, the 0.25 per cent rise adds approximately $91 to monthly repayments on a $600,000 mortgage. Australia’s gas prices, closely tied to global markets because of large LNG exports, are expected to rise further, hitting households and businesses in transport, manufacturing and mining.
Turning to fiscal policy, Bullock warned the government to be “careful” with its spending ahead of next week’s federal budget. She said both the private and public sectors would need to restrain demand to avoid locking in higher prices. “When governments are spending a lot of money and we’re running up against capacity constraints, then they do need to think about whether or not there’s ways they can help the inflation problem by looking for ways to constrain demand,” she said. She added that cost-of-living relief, if it simply puts more money into households’ pockets, “makes it harder to dampen demand”. However, Bullock said Treasurer Jim Chalmers was “on the same page” and noted state government spending also played a role.
Opposition blames Labor spending as treasurer warns Australians are ‘hostage’ to war
Deputy opposition leader Jane Hume told the ABC that the federal government’s spending was partly responsible for inflation being “too high”. “Unless you can get inflation under control, you are leaving our economy and every single citizen exposed to shocks from overseas and that’s what’s happening right now,” she said. Hume has previously criticised what she calls “wasteful spending”, including on the Voice referendum, arguing it has “fuelled the fire of inflation”. Shadow treasurer Tim Wilson went further, saying the rate hike showed the RBA lacked confidence in Labor’s ability to reduce inflation. “Australian households are paying the price because of Jim Chalmers’ active inflation agenda,” he said.
Treasurer Jim Chalmers countered that the RBA’s statement did not point to public spending as a factor in the decision. Speaking in Canberra, he said Australians were “hostage” to decisions made about the Middle East war. “I think that’s self-evident from an economic point of view. The Australian economy is getting absolutely pummelled by this war in the Middle East, and Australians are paying the price for that. And we’re seeing that again today with this interest rate decision,” he said. Chalmers described the war as adding “hefty price” pressures, particularly on fuel, with those costs expected to spread more broadly across the economy. He said next week’s budget would aim to “play a helpful role, not a harmful role, in the fight against inflation”, but signalled there would be little room for additional cost-of-living support, ruling out an extension of the fuel excise cut.
Antisemitism ‘front and centre in our ecosystem’, royal commission told
As the economic fallout from the Middle East conflict dominated political debate, a separate royal commission into antisemitism heard harrowing testimony from Jewish Australians who described a society where hatred has become normalised. The Royal Commission into Antisemitism and Social Cohesion, established in January 2026 after the Bondi terrorist attack two months earlier, is due to report by December. An interim report released at the end of April made 14 recommendations to strengthen counterterrorism responses.
Kovi Paneth told the commission he was worried about the “normalisation” of antisemitism after he was abused on a train and nobody intervened. “In Australia, Jews get abused and that’s just the way it is. And that’s the part that was very, very upsetting to me, in that it’s just … normalised in society and quite acceptable,” he said. He described an incident where his daughter was asked if she was a “dirty effing Jew” while in a bar. When she tried to record the man, his friend grabbed the phone and said, “Ignore him, he’s drunk, I’m sure not all Jews are dirty effing dogs.” Paneth said he would not let his wife or children walk alone at night. “Since October 7, antisemitism has gotten real … it’s gotten violent,” he said.
Another witness, identified as AAO, told the commission a relative was killed in the October 7 attacks. Since then she has worn nothing that publicly identifies her as Jewish. She recounted being at the Australian Open at Rod Laver Arena when a woman she did not know said to her that “the job that they did in Bondi wasn’t good enough, and that Jews are the worst, and they kill babies”. “It was very deep-seated, the hatred,” she said. The woman would not have known she was Jewish. Police removed the woman from the tennis after AAO gave a statement.
Dr Vic Alhadeff, former CEO of the NSW Jewish Board of Deputies, told the commission antisemitism had moved from “the edges” of society to “front and centre in our ecosystem”. He posed a question to the inquiry: “Is it too late to repair the fracturing of the social fabric in this country?” Alhadeff described confronting three high school students who had posted on Twitter that it was time to “burn the Jews” and “gas the Jews”, and had posted a photograph of themselves with their arms in the shape of a swastika. He brought a photo of his grandparents, murdered in the Holocaust, to educate them. He also confronted a priest who told a school congregation that Jews were “a jealous people”, referred a driver whose number plate had Nazi connotations to the police, and experienced road rage from a man who called him an “effing South African Jew”. Alhadeff also described going to the Sydney Writers’ Festival last year and hearing an audience member ask about the “elephant in the room … the Jewish tentacles”, with no one rebutting that trope. He expressed disappointment in the “silence” and indifference from an interfaith group after the Bondi attack. One member, he said, held him responsible for Israel’s actions in Gaza. “This issue goes to one of the issues which is information a lot of the antisemitism which has been rocking this country … for the last two and a half years, holding Jewish Australians accountable for what is taking place on the other side of the world,” he said. Jewish Australians feared there would be “another Bondi”, he said, calling on the commission to push antisemitism “back to the margin” and repair social cohesion.
Jeremy Stowe-Lindner, principal of Bialik College in Melbourne, told the commission that social media abuse towards students at his Jewish school had become so bad a system had been set up to block slurs. He said before October 7 there would be an antisemitic incident once every few months, but since then there had been an “avalanche of experiences”, including graffiti, stickers, about 50 potentially reportable incidents such as people driving by shouting abuse, and a student being spat on. “We can’t go into the CBD in Melbourne any more in school uniforms … We have had Hitler salutes and Jewish slurs,” he said. He said he personally had been called a Nazi and a fascist and had to upgrade his home security. The school’s security, paid for by parents through a levy, now regularly scans the area for antisemitic graffiti. Stowe-Lindner called for systemic funding for Jewish security, describing the current arrangement as “a tax on Jewish identity … a tax on Jewish people to keep themselves safe”. He recommended that the professions adopt a controversial definition of antisemitism and that slogans such as “from the river to the sea” and “globalise the intifada” be banned.
Other witnesses, testifying anonymously, described children being bombarded with antisemitic content online, including messages that “we owe Hitler an apology” and “Jews are controlling the government”. One mother, identified as Dina, said her child had cried and told her: “Now, when I come to Bondi, I think about dying.” Another mother, Natalie Levy, said her daughter, a proud Jewish young woman, was scared because of swastikas and “Heil Hitler” salutes at her school. Commissioner Virginia Bell previously noted that the “sharp spike in antisemitism … has been mirrored in other Western countries and seems clearly linked to events in the Middle East.”
