Stagflation Looms: Australia's Economic Storm

0:00It's April 14th. This is Sydney News today, your AI-powered local news. Australia's Reserve Bank Deputy Governor Andrew Hauser called stack Flation a Central Banker's nightmare, warning of tough months ahead. He says the big income shock from the Middle East War will push inflation higher while economic activity slows. That's the combo of stagnation plus inflation hitting growth hard. Starting in New York, Hauser noted consumer confidence has already tanked, which could drag on the economy this year. The Reserve Bank can't do much short-term to stop the inflation spike from this global energy mess. Stack Flation brings risks like rising unemployment and recession. Australia's headline, inflation, sits at 3.7% now, above the 2-3% target. Before the war, it wasn't wildly out of line with other countries, but rates still need to climb to tame it. Meanwhile, businesses might try slipping in bigger price hikes amid the chaos, and the

1:00bank is watching closely. Consumer sentiment plunged 12.5% in April from 91.6% to 80.1% points. The sharpest drop since COVID kicked off. The big question for the Reserve Bank is how the shock plays into activity and inflation over the next 2-3 years, though balanced those forces as Australia navigates the storm.