RBA Governor Sees Further Easing Needed for Inflation Target

Reserve Bank of Australia governor Michele Bullock has emphasized that further easing in demand and the labour market is necessary for inflation to return to its target band. In a recent speech, she noted that while the inflationary impact of the US-Iran war on fuel prices and headline inflation had been smaller than initially feared, headline inflation remains well above target.

Bullock also stated that underlying inflation is still too high, and the housing market has been weaker than expected in May. She attributed this to recent policy developments and a general softening of market sentiment.

Despite the easing in the job market being more than expected, Bullock suggested that further easing would likely be required for inflation to return to target. However, she concluded that there is evidence that domestic demand and labour market conditions have been easing as required to bring the economy back towards balance.