RBA: Summary of the Reserve Bank Board's Monetary Policy Meeting

Financial Markets Respond to Middle East Conflict

During their review of financial conditions, members examined how the ongoing conflict in the Middle East was affecting global markets. There had been significant increases in oil and energy prices worldwide, a rise in short-term inflation expectations, and heightened volatility across financial markets.

The group noted that the conflict could deliver a substantial negative supply shock to the global economy. However, they also acknowledged considerable uncertainty regarding both the magnitude and duration of these effects at the time of their discussion. Reflecting this uncertainty, market prices remained unstable as investors continually adjusted their outlooks.