Reserve Bank of Australia (RBA) Governor Michele Bullock stated that the central bank is observing signs that its past interest rate increases are beginning to affect the economy. She reiterated the RBA's commitment to taking all necessary actions to meet its mandate. Bullock expressed concern about the risk of second-round inflation effects stemming from the energy shock triggered by various global events.
The RBA has raised its benchmark interest rate to 4.35% in an effort to curb resurgent inflation. While acknowledging that growth is expected to slow, Bullock cautioned that underlying inflation remains in line with the bank's forecasts. The RBA board maintained a cautious policy stance, emphasizing the need for more data on jobs and prices before making further decisions on rates.
Despite leaving rates steady in June 2026, Bullock has not ruled out additional rate hikes if inflation fails to respond as anticipated. She noted that the bank's primary concern remains inflation, driven by excess demand in the economy. Analysts suggest that the RBA's current approach allows it more time to assess the impact of previous rate increases on households, businesses, and the labor market, while keeping options open for future policy adjustments.
