RBA interest rates: Governor Michele Bullock declares inflation ‘won’t take off again’ as she ups price fight
Michele Bullock has declared she’s confident inflation ‘won’t take off again’ with the Reserve Bank expected to mull a further interest rate hike within months.
Michele Bullock has declared she’s confident inflation “won’t take off again” with the Reserve Bank expected to mull a further interest rate hike within months.
Consumer prices are running hotter than her central bank had forecast last year, forcing a rate rise earlier this month to cool spending.
That reversed one of the Reserve’s three cuts through 2025 and analysts warn more mortgage pain may soon be on the way.
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By continuing you agree to our Terms and Privacy Policy.Ms Bullock, the RBA governor, told a dinner in Melbourne on Wednesday night it was “less clear” how the Reserve should move, compared to the COVID-19 pandemic or Global Financial Crisis, and would need “judgement”.
“The labour market we think is a little bit tight,” she said.
“Inflation is a bit elevated (but) I don’t think it is taking off again.
“We thought the economy was in balance, maybe it’s a little tighter than we thought.”
Her comments came after fresh data showed the country’s ongoing fight to tame the inflation dragon remained unfinished. Schools, clothes and child care costs were all biting families hard.
Core inflation — a measure of prices which strips out volatility — hit 3.4 per cent in the year to January, according to the Australian Bureau of Statistics.
The RBA expects that will hit as high as 3.7 per cent in the middle of the year before falling back into the 2 to 3 per cent target band by 2027. Those forecasts assume more rate rises are looming.
Judo Bank’s Matt De Pasquale thought a May hike was “locked in”, as did Commonwealth Bank’s Trent Saunders.
“Quarterly underlying inflation is likely to be too strong to be consistent with the RBA’s objectives,” Mr Saunders said.
Yet Ms Bullock was also eager to talk up Australia’s economic recovery and argued the outlook was much improved on just a year ago when there were concerns a trade war was looming.
“Demand was not growing very strongly, we had inflation coming down, we were hearing from (businesses) the labour market was softening a bit,” she said.
“Everyone was predicting the world economy was going down the tube.”
