RBA may tighten policy if oil shock lifts inflation
The RBA will act as needed to return inflation to target, with some tightening possible if the oil shock increases inflation expectations.
The recent oil shock has led to falls in consumer and business confidence, but there are few signs of a marked slowdown in activity.
The RBA is weighing the need to control inflation against the potential economic damage from the oil shock, which may lead to a more patient stance if the labour market weakens.