RBA warns high and rising risk of severe shock to world economy amid Iran war

The Reserve Bank of Australia (RBA) warned that conflict in the Middle East could trigger a shock that sends the world economy into a tailspin, the Guardian reported on Thursday.

The RBA said in its twice-yearly checkup of the Australian financial system that risks to financial systems rose in recent weeks and an extended disruption to oil and other markets will increase the chance of a major shock.

RBA assistant governor for the financial system, Brad Jones, said, “We see international risks as high and rising. In terms of financial risk, volatility has risen sharply … and further shocks could lead to markets becoming somewhat disorderly.”

Market reaction

At the time of writing, the AUD/USD pair is up 0.36% on the day at 0.7048.