Reserve Bank of Australia (RBA) Board Member Ian Harper said on Tuesday that any possible risk of long-term inflation expectations becoming unanchored requires "strong action," according to his speech on Tuesday.
Harper said that Australia was seeing renewed inflation pressures even before the oil shock caused by the Middle East conflict.
The RBA increased the official cash rate by 25 basis points to 4.35% at its May meeting.
"Higher interest rates are expected to slow the economy and lower the risk that inflation becomes entrenched," said Harper.