RBA Governor Hints at Further Rate Hikes Amid Inflation Concerns

RBA Governor Michele Bullock expressed uncertainty about whether further interest rate hikes are necessary to control inflation, stating that policymakers are prepared to act as needed. The central bank's three rate increases this year have yet to fully impact the economy, and Bullock noted that underlying inflation remains too high.

The recent rise in oil prices due to the Iran war could lead to higher costs for businesses and consumers, which may necessitate a further slowdown in domestic demand. Bullock emphasized the importance of keeping inflation expectations anchored and preventing lasting increases in prices.

The RBA's hawkish stance is reflected in market expectations, with one more rate hike this year fully priced in by investors, taking the cash rate to 4.6 per cent. This would follow the three increases between February and May that erased the easing delivered in 2025.