Michele Bullock's Rate Decision Hangs in Balance

RBA Governor Michele Bullock is set to make her second biggest decision in her interest rate-setting career. Her first major U-turn was in February, when she and her board decided they were wrong to cut rates three times in 2025.

This decision marked a significant admission of mistake, as the RBA effectively said they had 'stuffed up'. While they didn't say it directly, economists recognized this as a rare display of humility from the central bank.

The RBA's previous rate cut in 2025 was criticized for being premature, and some argue that the board was misled by Treasury's forecasting guesses from the 2025 Budget. However, the Albanese Government's generous handouts were likely to have had an impact on the economy.

Today, the housing sector is facing a crisis, with predictions of a record house price fall. Inflation remains too high at 3.6%, but job ads and employment numbers show resilience. Business and consumer confidence are low, but not catastrophic.