Bullock Hints at Fifth Rate Rise as RBA Looks to Tame Inflation Pressure

Reserve Bank governor Michele Bullock has refused to rule out another interest rate rise in November, despite the latest increase taking the official cash rate to its highest level since 2011. The RBA board met on Tuesday and unanimously decided to raise the cash rate by 25 basis points, from 4.35% to 4.6%. This is the fourth rate hike this year, with a total of $364 added to borrowers' repayments.

Bullock said that while inflation figures due out on Wednesday are expected to show a rise to 3.6%, it may not be enough to force another rate hike. She emphasized that what matters most is the underlying inflation trend over the past six months, which has been around 3.5%. Bullock acknowledged that the war in the Middle East has driven much of the persistent inflation, saying 'it's made us all poorer in this country'.

She also highlighted productivity as a key concern, stating that it remains stagnant and is crucial for economic growth and job creation. Treasurer Jim Chalmers defended the government's record on spending, pointing out that Australian workers are paying a hefty price for the war. He conceded that more work is needed to address the long-standing productivity challenge.

Bullock said that while the RBA has raised interest rates three times earlier this year, 'a lot of that effect is still to flow through', and the latest increase is intended to be restrictive enough to bring down inflation pressure. However, she stopped short of providing forward guidance on future rate decisions.