Bullock Keeps Rate Hikes in Play Ahead of RBA Meeting

RBA Governor Michele Bullock indicated that interest rate hikes remain on the table ahead of the central bank's August meeting. The RBA is taking a wait-and-see approach as it assesses how the economy is responding to the past three rate hikes, but remains willing to lift rates again if necessary to bring inflation under control while supporting full employment.

Bullock stated that 'the full effects of this year's cash rate are yet to be felt' and emphasized that rate hikes are designed to slow demand so it is more in line with growth in supply and alleviate those inflation pressures. The RBA has already lifted rates three times in 2026, taking the official cash rate (OCR) to 4.35%.

Market players remain mixed on the direction of monetary policy, with some predicting a near-term pause while others believe that the RBA will increase interest rates further. Economist Saul Eslake noted that the RBA is waiting for data and wants to see a couple of quarters with underlying inflation back within the target band before cutting rates again.