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Australia warns Iran war could raise borrowing costs and inflation

Treasurer Jim Chalmers said the higher bond yields from the conflict will increase Australia’s debt servicing costs by billions, even as he expects no recession.

Reported · Written up by our desk · Central Banks

Australian Treasurer Jim Chalmers said the US war with Iran is an economic disaster, arguing it is driving up global inflation and borrowing costs.

In comments carried by Forexlive, he warned that rising bond yields would add billions to debt servicing, with the impact showing up in Australia through petrol prices, interest rates, and the cost of government debt.

Chalmers also said the most direct transmission to Australia is through oil, noting that any prolonged disruption to Gulf supply would keep upward pressure on prices and on the response from the Reserve Bank of Australia.

He added that his Japan visit, focused on fuel security, highlights how energy-importing economies in Asia are coordinating their response to the oil shock.

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