SYDNEY - A top Australian central banker on Tuesday warned that climate change was likely to lead to greater volatility in inflation while making it harder to judge the right setting for interest rates, adding extra uncertainty to future policy.

Reserve Bank of Australia (RBA) Deputy Governor Michele Bullock said the impact from climate change on the neutral rate - at which monetary policy is neither expansionary nor contractionary - is not clear cut.

"These concepts are difficult enough to assess in real time in the normal course, let alone when climate change is introducing additional variability and uncertainty," Bullock said in a speech in Canberra.

The RBA has raised interest rates by 400 basis points to an 11-year high of 4.1% to tame runaway inflation, but has paused for two straight months now given policy is clearly restrictive.

During the Q&A session, Bullock, who is due to become governor in mid-September, said interest rates may need to rise again as inflation is still too high, but policymakers would be data-dependent, largely repeating recent guidance from the bank.

"All I can say is that we may have to raise interest rates again but we're watching the data very carefully, and we will be taking decisions for the time being until next year at least month by month."

Markets have priced out almost any chance of a rate hike at the RBA's September meeting next week, and around a 60% probability that the tightening cycle was over.

(Reporting by Stella Qiu; Editing by Jacqueline Wong & Simon Cameron-Moore)