Reserve Bank governor Michele Bullock tries to shut down questioning on government spending, inflation

Reserve Bank chief Michele Bullock tried to shut down questioning at a parliamentary hearing before being accused of acting like a social media influencer.

During a tense exchange with Liberal senator Jane Hume, she became frustrated, sighing when asked if higher government spending, as a proportion of gross domestic product, was making inflation higher than otherwise.

“Look, I really don’t think I’ve got anything more to add on this,” she told the Senate economics committee on Thursday morning.

“I’ve answered this question all last week. I answered at the press conference, I answered it at House of Reps on a multitude of occasions.

“When we look what to do with monetary policy, we look at aggregate demand, incorporating public and private and we take public as given, including public spending, and we set interest rates accordingly.”

The clash intensified near the end of Senator Hume’s allocated 15-minute slot.

“I really feel that I’m answering the same question over and over again,” Ms Bullock said.

Senator Hume took issue with the governor’s complaint, likening her to a social media influncer.

“I understand you must feel that, governor, but it’s because we need to be able to understand what it is that’s driving the decision - you know that Australians are very disappointed to find that there is a 13th interest rate rise under this government,” she said.

“People were hanging on your words like some sort of internet influencer.”

Australia’s chief central banker shot back that “it’s taking too long to get inflation back down”.

“I understand people are disappointed with the interest rate rise but it would not be appropriate in the circumstances we’ve got to not take that action because inflation is bad for everyone,” she said.

Ms Bullock, however, had admitted that government spending had to potential to put up inflation by adding to total demand for goods and services, repeating when she told the House of Representatives economics committee last Friday.

“It can. It is part of aggregate demand and if you’re in a situation like we are at the moment, where we have excess demand, private and public are both part of demand,” she said.

But when it came to updated RBA forecasts of inflation hitting 4.2 per cent by June this year, Ms Bullock said surging private demand and not government spending was the culprit, this time sticking to Treasurer Jim Chalmers’ argument that the Federal Government isn’t to blame.

“If you look at the difference between our forecasts in November where we had inflation coming back into the band and you look at our forecasts now, the key difference there is not fiscal policy, it’s pretty much the same as it was in November,” she said.

“The key difference is private demand.”

Ms Bullock revealed the RBA’s monetary policy board became worried about rising domestic inflation in September, just a month after it had cut interest rates for the third time in 2025.

As a Parliament House division bell rang, Ms Bullock defensively said: “We were sounding the alarm back in September.”

Headline inflation was at 3.2 per cent in August, a level above the RBA’s 2-3 per cent annual target.

But it climbed to 3.6 per cent by September and after dipping to 3.4 per cent in November climbed back to 3.8 per cent at the end of last year, leading to February’s 25 basis point hike that took the cash rate to 3.85 per cent.

Financial markets are expecting a follow-up rate rise in May following the release of March inflation data.

Last year’s three rate cuts - in February, May and August - also coincided with a 31.8 per cent annual increase in the value of new property investor loans, Australian Bureau of Statistics lending finance data showed.

“When interest rates decline and housing prices are rising, investors respond much more quickly than owner-occupiers,” Ms Bullock said in response to Greens senator Nick McKim.