Bullock Warns of Another Rate Hike Amid Productivity Concerns

Australia's Reserve Bank governor Michele Bullock has warned that another rate hike may be necessary to combat high inflation, which she attributes to weak productivity growth. The RBA's three rate hikes in 2026 so far may not be enough to get inflation back to target, according to Bullock.

The cash rate is currently at a 15-year high of 4%, and Bullock suggests it could rise to 4.6% if needed to bring down headline inflation, which stands at 4%. This would be the highest level since 2007.

Bullock also acknowledged that the RBA has not done enough to explain its role in controlling inflation, saying 'we've got to do better at explaining to people why higher interest rates are not causing inflation.'