Bullock Leaves Door Open to Another Rate Hike Amid Inflation Concerns

Reserve Bank Governor Michele Bullock has hinted that another interest rate hike may be on the horizon for Australian mortgage holders. The central bank's target is to maintain low and stable inflation, but current figures are well above its desired range.

In May, headline inflation was at 4% and underlying inflation stood at 3.6%, both exceeding the Reserve Bank's target of between 2-3%. Bullock acknowledged that Australia started the oil crisis at a disadvantage due to domestic economic conditions.

The war between the US and Iran has driven up fuel prices, which will continue to impact other costs. Even if the conflict subsides soon, Bullock warned that underlying inflation is expected to remain high as these price rises flow through to other areas.

The next Reserve Bank Board meeting is scheduled for August 10-11, with a decision on interest rates to be announced on Tuesday. The stock market currently predicts a 28% chance of another rate hike at this meeting.