Bullock Urges Businesses to Lift Productivity Amid Inflation Worries

RBA Governor Michele Bullock called on Australian businesses to lift their productivity ahead of next week's rate decision. In her last public comments before the meeting, she said businesses have become 'less dynamic' over the past decade and are not investing enough.

Bullock framed productivity as the structural constraint behind Australia's inflation struggle, citing internal Reserve Bank work that showed firms are not combining labor and capital more productively. She pointed to competition policy as a promising spur, but acknowledged that she does not have the answers.

The Governor also warned about the impact of supply shocks on the economy, including the Middle East conflict and its effects on fuel prices. She noted that the Reserve Bank cannot legislate productivity and can only keep inflation expectations anchored while households and firms do the investing.