Today the independent Reserve Bank Monetary Policy Board increased the cash rate by 25 basis points.
Australians are already paying a hefty price for the war in the Middle East and this decision will make it tougher.
It will add to the pressure that families and businesses are under at a time of ongoing global instability.
The RBA's Statement is clear that conflict in the Middle East is already adding to inflation.
While this decision was widely expected and widely anticipated, that doesn't make it any easier.
We understand that people are under pressure which is why we're rolling out responsible cost of living relief including temporary cuts to the fuel excise and heavy road user charge, cheaper medicines and more bulk billed doctor visits, two more rounds of tax cuts and a $1000 instant tax deduction.
Since we halved the fuel excise, we've seen petrol and diesel prices fall by at least 70 cents in most capital cities.
While we already had an inflation challenge in our economy the war in the Middle East is making this challenge worse, and we expect the impact of this to continue for some time.
The RBA's Statement also notes that there are "materially heightened uncertainties" in the outlook for the economy.
Inflation is down from its peak, but it is higher than we would like, and the conflict in the Middle East has contributed to the recent rise in headline inflation.
The tick up in headline inflation in the most recent data was driven by fuel. In March if it weren't for the spike in petrol prices, inflation would have gone down.
The duration and severity of the conflict will determine how much more pressure it adds to global inflation and how much it is a hit to growth.
The uncertainty and volatility in the global economy mean there is an even greater premium on responsible fiscal management.
The budget is already more than $233 billion better than we inherited because the Government has found savings, kept a lid on spending growth and banked revenue upgrades.
In the upcoming Budget, we'll continue that record of responsible economic management by saving more than we spend and banking all upward revisions to revenue.
When we came to office, inflation was north of six per cent and rapidly rising, it's now much lower than that. Underlying inflation was almost five per cent, it's now also much lower.
The Australian economy is not immune from extreme global volatility, but we are well placed and well prepared with faster growth at the end of last year than any major advanced economy, low unemployment and solid wages growth.
This Budget will be focused on fuel security, addressing inflation, boosting productivity and resilience and managing global economic uncertainty, and today's decision highlights why this is so important.
