The governor of the Reserve Bank of Australia, Michele Bullock, says there is a “live” chance of a rate hike in two weeks’ time, as the central bank frets that a “prolonged” oil price spike as a result of the attacks on Iran will make it harder to bring inflation under control.

Investors and economists had largely discounted the chance of a move at the upcoming board meeting on 16-17 March, believing that the RBA would wait for the next quarterly inflation report before a likely hike in May.

But Bullock, in unusually forthright comments, said a back-to-back rate rise was on the cards given “elevated” inflation and a tight labour market.

“I’m not making a prediction about March, but it will be a live meeting,” she said.

“We have inflation at 3.8% headline, and we have unemployment at 4.1; [that’s] tight.

“The board will be actively looking at whether or not it needs to move more quickly. So I would discourage people from thinking that we necessarily only meet every quarter.”

The RBA board lifted its cash rate to 3.85% at its February meeting in response to a surprise inflationary surge through the second half of last year.

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Financial markets pricing showed the chance of a hike on 17 March jumped from near zero to higher than 25% after the governor’s comments, Bloomberg reported, although bets remained on the following meeting in May as the most likely timing for another move.

“The board’s strategy has been to try and bring inflation down to target in a reasonable time frame while preserving the gains in employment,” Bullock said.

“But it does beg the question of how patient can we be.”

With a key Middle Eastern shipping route for crude oil essentially shut since the US-Israeli missile strikes at the weekend, Bullock warned that a “very elevated and lengthy rise” in energy prices was a threat to economic growth, here and around the world.

Speaking at the AFR’s business summit on Tuesday morning, Bullock said the central bank typically looked past temporary price shocks but that it was not clear that approach would be appropriate this time around.

“This one might be a little bit harder, because … we already have elevated inflation, and I think there is a risk that inflation expectations might become a little bit unanchored,” she said.

The Brent crude oil price, an international benchmark, was a little higher overnight to trade at $US78.07 a barrel, while stocks on Wall Street ended the session largely unchanged.

Bullock said the response to the attacks on Iran had so far been “orderly” and that the central bank had been thinking about the potential impact of energy price shocks since last year.

She said more expensive fuel added to headline inflation, could boost government coffers through energy exports, but also dragged on growth as households faced higher power bills and petrol costs.

“At the same time as there’s potentially an inflationary impact, there’s also potentially, if it’s a very elongated conflict, the potential for it to be impacting economic activity, not just here, but around the world.”