Australia news as it happened: RBA hikes interest rates to 4.35 per cent; author Craig Silvey pleads guilty to possessing, distributing child exploitation material

The boss of Australia’s largest petrol station operator has warned fuel prices will need to rise further if the Iran war continues to choke off the supply of oil to the world economy.

Speaking at the Macquarie Australia Conference today, Ampol chief executive Matt Halliday said there was likely to be further pressure on prices if the supply crunch continued during a period of higher demand over the northern hemisphere’s summer.

Halliday, who heads a company running more than 1800 service stations across Australia, said that if the fuel shock lasted longer than three months, for instance, there would need to be more “demand destruction”, in which some economic activity is curbed in response to high energy costs.

He said Europe’s supplies of jet fuel would get “tight” by the end of this month. “Ultimately, Australia as a developed country is out there needing to compete for cargoes and will continue to do so, but price will go up to destroy global and regional demand,” he said.

Some businesses have already restrained activity because of high prices – such as airlines cutting routes. During summer in the northern hemisphere, when there is typically more demand for fuel for travel, Halliday predicted there would now also be “more and more demand destruction”.

The US-Iran ceasefire is faltering as US President Donald Trump’s new operation to free ships stranded in the crucial shipping lane the Strait of Hormuz, dubbed “Project Freedom”, has drawn the biggest exchange of fire with Iran since a fragile truce began four weeks ago. Here are the latest developments:

• Iran has been widely condemned for a volley of drone and missile strikes targeting the UAE that hit ships in Hormuz and set a port – key for oil storage – ablaze.
• The US said it had destroyed Iranian military boats and shot down missiles and drones, and that Iran had fired on American ships in the strait.
• Off the water, Britain and Saudi Arabia are among nations calling for a return to diplomacy, as the US pushes China to use its ties to Iran to pressure the nation into reopening the strait.
• Iran warned Trump that “Project Freedom” had already become “Project Deadlock”.
• The latest round of attacks is causing chaos at some of the world’s busiest airports, including Dubai.

Labor needs to make price gouging illegal and hit the top 1 per cent of income earners with higher taxes after today’s interest rate decision, according to the Greens.

The party’s economic justice spokesperson, Nick McKim, released the following statement after interest rates were lifted for the third time this year today:

This is another kick in the teeth for mortgage holders and renters who are already being smashed by rising costs. This will punish people who are suffering the most and are not responsible in any way for inflation, while the super-rich who have cash in the bank will sit back and watch their wealth grow.

“The top 1 per cent will be popping the champagne corks at the extra money they’ve just been handed by the Reserve Bank and a Labor government sitting on its hands.

“Raising interest rates will not stop the war in the Persian Gulf, and it will not bring fuel prices down.”

And finally, the RBA governor was asked by journalists about the concern over fuel shortages as the war in Iran squeezes global supply. Will rationing be needed?

Michele Bullock said that was a “very pertinent question, and it could get very bad”.

“I don’t know practically how that would be dealt with, but if that were to happen, I think we’re in a very different world, and we’d be looking very differently at the way things are panning out in the economy,” she said.

“That’s not what we’re seeing happening at the moment, and it’s not the central expectations.”

If it did come to that, she said, the RBA “would be looking very differently at things”.

Now the RBA governor has been asked about wage increases – can the economy cope with salaries rising as well as inflation?

Michele Bullock said she expected people to ask for higher salaries as the cost of living increased with inflation, and, given the labour market is “still a bit tight”, they might have some success. But she added: “What worries me is that this is the second shock [after the COVID pandemic] in so many years.”

In some of her final public remarks today, Bullock said the RBA was continuing to hope for an unemployment rate around 4 per cent, rather than the tighter 3.5 per cent seen coming out of the pandemic that led to some skills shortages. “But ultimately, we don’t control that,” she said. “We can only basically set monetary policy to keep inflation low and stable. That will hopefully mean that businesses have room to plan, not worry about inflation ... to hire people, to invest.”

On the question of unemployment levels, the RBA’s Michele Bullock says that while the Reserve Bank has a dual mandate to bring down inflation and keep unemployment low, “we don’t give equal weight to both”.

“We are still conscious that we want to try and slow the economy enough to bring inflation back to target, and we would rather not have unemployment or employment slow any more than it has to,” she said. “That’s still part of it, but we do have to pivot depending on where we think the risks are.”

RBA governor Michele Bullock has warned the Middle East war’s squeeze on global oil markets means inflation will rise no matter what.

“There’s nothing we can do about that,” she said. “Over the next three to six months, we’re going to see inflation peak, probably in June. I think our forecast is about 4.8 per cent. It will then start to come down.”

Inflation was expected to dip, especially if oil prices fell, she added. “But, look, it is tough and we’re staring down the barrel, not only here, many other countries are staring down a similar barrel. It is a very, very tough time.”