For five years, Australia's central bank, the Reserve Bank of Australia (RBA), has been trying to bring inflation back down to its target of 2.5%. However, inflation has remained stubbornly high, contributing to a cost of living crisis and growing public frustration. During an interview with the ABC’s 7:30 report, RBA deputy governor Andrew Hauser acknowledged the public's concern, noting that inflation has been above the target for a long time. While the RBA has not yet decided to take more decisive action, Hauser suggested that this moment may be approaching. The RBA had initially planned for three interest rate increases this year to help bring inflation back to the target by the end of 2025. However, recent global events have made this goal more challenging. Tensions between the United States and Iran have escalated, with attacks on oil tankers and infrastructure in the Strait of Hormuz. This has pushed global oil prices above $100 a barrel, leading to higher fuel costs. Unleaded petrol prices are nearing $2.10 per litre, and diesel has surpassed $2.50, adding to the financial burden on households. In addition to rising oil prices, increased investment in data centres has placed further strain on the construction sector, which is already dealing with shortages of materials and skilled workers. This has slowed down the building of homes, roads, and rail networks, which are essential for economic growth. Despite these challenges, consumer spending has remained strong, keeping consumption growth steady. However, Australia's productivity—measured by how efficiently goods and services are produced—has not improved, limiting the economy's ability to grow without fueling inflation. Many investors and economists now believe the RBA may need to take more aggressive steps to control inflation. Financial markets are predicting a more than 70% chance of another interest rate increase in September, with the possibility of a second hike by the end of the year. Hauser said the RBA is prepared to raise rates sharply if needed, even immediately, and may prioritize controlling inflation over keeping unemployment low. Since mid-2021, inflation has been below 3% for only one year, while unemployment has remained below 5%, a historically strong labor market. However, the main challenge remains high inflation, which has led the RBA to raise interest rates three times this year. The key question now is whether these steps have been enough or if more action is required.