Bullock Faces Biggest RBA Test Amid Rate Hike Odds

RBA Governor Michele Bullock faces her biggest test as she prepares for the Reserve Bank of Australia's board meeting on September 29. The upcoming meeting comes after futures implied an 82% chance of a rate hike to 4.60% by October, up from 62% just two weeks prior.

The cash rate currently stands at 4.35%, following three increases in the first half of 2026 totaling 75 basis points. Despite headline inflation easing, underlying inflation remains above target, and the ongoing Middle East conflict continues to drive up oil prices.

Bullock acknowledged that her worst fears about inflation are materializing, with businesses warning they can no longer absorb the costs of the conflict. The RBA's aim is to prevent higher inflation expectations from embedding in price and wage setting.