"The Reserve Bank of Australia's decision to raise interest rates points to the critical times ahead as global disruptions impact Australia's economy," said Innes Willox, Chief Executive of the national employer association, Australian Industry Group.
"Locally-driven inflation has been too high and rising for many months. But the spectre of imported inflation due to the Iran conflict has now shifted the balance, requiring difficult but necessary and immediate action to slow the pace of price growth.
"Global energy disruptions will be the major challenge confronting our economy in 2026. We are now seeing price rises for liquid fuels, which will spread through many other consumer and industrial products in the coming months.
"Australian industry is already reporting difficulties with forward orders as partners in Asia struggle to secure inputs for fuels, fertilisers and many other industrial products. Transport systems are under stress, with spillovers expected for construction and manufacturing.
"It is too soon to tell how the conflict will next play out, or how long it will impose on our industrial supply chains. But today's RBA decision, as difficult as it is, will help us get ahead of the inflationary curve now.
"Other difficult responses will be required across the policy landscape in coming months as these disruptions work through our economy. It is critical government works with industry to understand, track and respond so we are best placed to weather these challenges," Mr Willox said.
