ANZ economists Adam Boyton and Adelaide Timbrell stated in a research report on Thursday that the most direct impact of the Iran conflict on Australia would be higher inflation.

With inflation above the target level and the Reserve Bank of Australia (RBA) viewing the labor market as tight, inflation risks will be more central to the RBA board's concerns than risks related to economic activity.

This situation is further intensified by the strong start to the economy in 2026: GDP grew 2.6% year-on-year in the fourth quarter of 2025, which the RBA already considers above potential growth.

The March interest rate decision "will not be as clear-cut as February's." Besides the March meeting, ANZ still anticipates an additional 25 basis point rate hike in May.

Following that, the bank expects the RBA to pause its rate hikes to assess whether the increase in the cash rate is sufficient to curb inflation risks. This pause would also provide the central bank time to evaluate developments in the geopolitical situation and the global economic outlook.