SYDNEY, March 9 (Xinhua) -- Reserve Bank of Australia (RBA) Governor Philip Lowe said the central bank would consider increasing Australia's interest rate this year, citing uncertainty in rising inflation and commodity prices.
Speaking in Sydney on Wednesday, Lowe said that given Australia's 3.5 percent rate of inflation, "it is plausible that the cash rate will be increased later this year."
"I recognize that there is a risk to waiting too long, especially in a world with overlapping supply shocks and a high headline inflation rate. But there is also a risk of moving too early," said Lowe.
A number of major private Australian banks, including the Commonwealth Bank of Australia (CBA), have forecast that interest rates would see their first rise by the middle of the year.
Meanwhile, Lowe touted optimism that surging commodity prices would benefit Australia.
However, the price of oil has surged by 40 percent since the start of February.
"Australia is in a different position because we export many of the commodities whose prices are rising," said Lowe. He added that despite profits for Australia's commodity producers, rising petrol costs would impact everyday Australians.
"This (rising fuel prices) will eat into household budgets, push up costs for many businesses and crimp spending in some areas."
Liam Wagner, associate professor in energy from the University of Adelaide, told Xinhua that crude oil would likely have much further reaching impacts on Australia's economy.
"The diesel price is going to go up quite significantly, and as a consequence the price of all food is going to go up."
He added that rising commodity prices would likely constrain Australia's post-COVID economic growth.
"With this shock of oil prices going up so high, and so quickly, we'll start to see they're having an effect on the economy quite significantly." ■