RBA Governor Michele Bullock has warned that a rate hike at the March board meeting in less than a fortnight is a “live” option. Bullock said the Iran conflict and the surge in oil prices are adding a new inflation risk on top of what was already a tricky picture. Speaking at the AFR Business Summit, Bullock said it will take time to sort out the impact of the Middle East conflict. While it has already pushed up energy prices, it could slow the world economy and reduce inflation over time. On productivity, Bullock said the local economy's supply potential has been somewhat lower than previously assessed.

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News in brief

On day four of the war in the Middle East, the US and Israeli strikes on Iran continued, while Israel exchanged fire with Hezbollah militants in Lebanon. 

Australia’s Middle East ADF headquarters was hit by an Iranian missile, Defence Minister Richard Marles said. All personnel are safe. Foreign Minister Penny Wong said the number of Australians stranded in the region dwarfed any previous consular assistance operation. And the Albanese government urged motorists to not panic buy petrol ahead of likely price increases.

After 22 years, the controversial Kyle and Jackie O Show, has been taken off the air effective immediately after Jackie “O” Henderson told media company ARN Media she could no longer work with her co-host, Kyle Sandilands. The duo are one year into a $200 million, 10-year deal.

There has been severe flooding across south-eastern Australia after what's being described as a once-in-a-generation rain event. A slow-moving low has been dumping rain across South Australia, western Victoria and western New South Wales since the weekend. 

Apple has released a new affordable iPhone, priced at just under $1,000, as it pushes to keep its market share from its key rivals Samsung and Google. The launch comes after Google launches its low-cost offering, at $849.

Weight-loss jabs could be given by paramedics at the scene of a heart attack to cut the risk of complications, after researchers found that drugs such as Wegovy and Ozempic had a powerful effect in preventing tissue damage. That has the potential to cut the risk of serious problems that affect up to half of all patients suffering a heart attack.

Fear-o-meter

Belinda Allen, CBA's Head of Australian Economics, on how the Iran conflict impacts Australia:

The conflict in Iran and the escalation through the Middle East has several potential implications for the Australian economy. Initial impacts will like be contains to financial markets and sentiment.

Direct impact will be felt through higher oil prices and the pass through to petrol and headline CPI. We estimate if Brent remained at $US80/bbl for the remainder of Q1, 25, fuel would add around 0.1 percentage points to our Q1 headline inflation forecast.

Higher energy prices, if sustained, should boost export revenue and national income, but a large concentration of foreign ownership in the sector should blunt this impact.

Beyond these initial impacts, any other effects will be dependent on whether a supply side energy shock moves into a demand shock for the global economy.

We expect the RBA to look through any supply side shock to petrol and headline CPI in the near term. We continue to expect the RBA to lift the cash rate in May based on the domestic data flow.

If geopolitical concerns escalate and are prolonger, morphing into a large demand shock for the global economy, the balance of risks for the RBA could shift.

Fear & Greed Q+A today

On how businesses can cross the 'last mile' to roll out AI - and why focus just on Large Language Models (LLMs) could see companies left behind. 

 

“We have to move fast. We can’t rest on our laurels of ‘LLMs are cool.’ We have to move fast.

 

You can think about LLMs as creating what I would call raw intelligence — just the stuff that outcomes are made of behind the scenes. It’s trained on the world’s information. It helps you generate text.

 

But for our customers, they’re looking at very strict customer outcomes for the folks that they serve every day… So we bring together the business logic, the context, the data with the raw intelligence of large language models and create something pretty special that really helps our customers drive better outcomes at scale.”

 

This interview is from a series recorded as part of the Agentforce World Tour Sydney, looking at how agentic AI is transforming Aussie businesses.

Greed-o-meter

Iran claims to have closed the Strait of Hormuz. This is what that stretch of water means for the global flow of oil.

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