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New Reserve Bank governor Michele Bullock has warned that the war between Israel and Hamas could drive up petrol prices and fuel inflation – and joked that there is someone ‘even more hated than his former boss.

Even before the Hamas attack on October 7, Australian oil prices had already jumped 14 percent in a year, while inflation was worsening again.

With motorists already paying more than $2 a liter for E10 unleaded petrol, Ms Bullock said even higher petrol prices could drive up inflation.

“At the moment we are a little more concerned about the potential implications of this for inflation,” she told a Superannuation Funds Association of Australia forum on Wednesday.

Ms Bullock said consumers would expect inflation to remain high and would continue to spend, after the shock of conflict in the Middle East, following Russia’s invasion of Ukraine in 2022 and the Covid pandemic in 2020.

“Typically when you think about supply shocks, about rising prices, you say, ‘Well, it’s probably not a big deal. It’s going to go away,” she said.

“But the problem is we’ve had shock after shock after shock and the longer that keeps inflation high, even if they’re supply shocks, the more people adjust their thinking.”

“And the more people adjust their inflation expectations, the more inflation is likely to become entrenched.”

Treasurer Jim Chalmers, who appointed Ms Bullock, echoed similar sentiments on Thursday.

“The conflict in the Middle East is now another worrying aspect of the economic outlook,” he said.

“We are already seeing a rise in global oil prices in recent months, and the conflict in the Middle East risks making the situation worse.”

A drop in the unemployment rate to 3.6 percent in September, from 3.7 percent in August, also adds to concerns about wage pressures fueling inflation.

Indeed, the RBA expects unemployment to reach 4.5% by the end of 2024 to bring inflation back to its target.

The Reserve Bank’s 12 rate hikes in 13 months were the most aggressive since 1989, after Russia’s aggression following Covid lockdowns caused a surge in inflation in early 2022.

But Ms Bullock suggested former Qantas chief executive Alan Joyce was even more hated than former RBA governor Philip Lowe, who suggested in 2021 he would keep interest rates at a low record 0.1% until 2024 “at the earliest”.

“One of the things about the independence of the Reserve Bank – and I’m sure Phil, I think he said this and he would agree with this – is that because we are independent of government, we can make difficult decisions,” she says.

“And yes, he did a lot of cops and I think he was knocked down by Alan Joyce.”

Bullock, however, indicated she was prepared to make unpopular decisions after her seven-year term as well.

Its latest inflation warning came a day after minutes of the RBA’s October meeting revealed board members would have “low tolerance for a slower return to inflation.” inflation” towards its target of 2 to 3% “than currently planned” by mid-2025.

Even before the Hamas attack on October 7, Australian gasoline prices had already risen 14 percent in a year as inflation worsened again (pictured is the rubble of a camp refugees in the Gaza Strip).

But Ms Bullock suggested former Qantas chief executive Alan Joyce was even more hated than former RBA governor Philip Lowe (pictured in August), who suggested in 2021 he would keep rates on hold interest at a record low of 0.1 percent until 2024. at the earliest’

The cash interest rate remained at an 11-year high of 4.1 percent this month.

But a poor September quarter inflation reading, due on October 25, could lead the RBA to raise rates again on Melbourne Cup day, November 7.

This would be the 13th rate hike since May 2022 and would take the spot rate to a 12-year high of 4.35 percent.

Inflation in August reached 5.2 percent, compared to 4.9 percent in July, marking the first monthly deterioration since April.