ABC News Daily Will the Iran war drive interest rates even higher?
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Mar 17, 2026 Ian Verrender, ABC chief business correspondent, explains the RBA's recent rate rise and the tight board split. He discusses how the Iran conflict could push inflation via energy and supply shocks. Ian compares current risks to 1970s oil shocks. He considers whether more hikes are likely and the trade-off between fighting inflation and slower growth.
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RBA Acting Preemptively Because Of Middle East Uncertainty
- The RBA preemptively raised rates partly because the Middle East war increases upside inflation risk.
- Ian Verrender says the board cited wide uncertainty and feared repeating the Ukraine lesson of acting too late on energy shocks.
Energy Price Shock Spreads Inflation Through Every Industry
- Rising fuel and energy costs act as broad input-price shocks that push up costs across goods and services.
- Verrender explains energy enters virtually every production process, so higher fuel flows into inflation everywhere from manufacturing to services.
1970s Oil Shocks Framed As Precedent For Today's Risk
- Historical parallels to 1970s oil shocks inform today's risk assessment, with 1973 and 1979 cited as major inflationary events.
- Ian notes prior shocks didn't close all Middle East exports, whereas current disruptions risk more severe global impact.