Israel’s air strikes on Iran’s nuclear facilities and the Islamic Republic’s retaliation represents a “perilous” moment for the Middle East, and together with turmoil elsewhere means the global economy is a “pretty dangerous place right now,” Australian Treasurer Jim Chalmers said Monday.

Chalmers pointed out that a surge in oil prices since Friday’s strikes had prompted money markets to increase bets on interest-rate cuts in Australia, suggesting traders are more focused on the implications for economic growth than near-term inflation. The conflict between Israel and Iran entered a fourth day on Monday, stoking fears of escalation in the oil-rich region.

“Higher oil prices do pose a risk to the inflation outlook but they also pose a risk to global growth,” Chalmers told Australian Broadcasting Corp television in an interview. “Typically what Reserve Banks do, central banks, not just our own, but they try and look through temporary spikes in prices, and to consider the broader implications.”

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When asked what his department is advising him about the economic implications of the conflict, Chalmers said that it represents a key element of global volatility. This ranges from US tariff tensions to the Ukraine-Russia conflict.

“So the global economy is a pretty dangerous place right now. Australia is well-placed and well-prepared to deal with all of this uncertainty and volatility,” Chalmers said. “But we won’t be immune from it.”

Australia’s central bank next meets on July 7-8 with money markets implying a near-90 percent chance of a third quarter-percentage point reduction this year to take the cash rate to 3.6 percent. Traders see the RBA cutting two more times after that for a terminal rate of 3.1 percent.

By comparison, economists’ consensus is for two more cuts this year — August and November — for a terminal rate of 3.35 percent.

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Chalmers will speak at the National Press Club on Wednesday in an address titled "Our Second Term Economic Agenda", after the ruling Labor Party won a sweeping victory in Australia’s May 3 election.