RBA Governor Warns Australian Inflation Remains Too High Amid Global Supply Shocks

Reserve Bank of Australia (RBA) Governor Michele Bullock has issued a stark warning that national inflation remains persistently too high, dampening market hopes for an imminent rate cut. Speaking before a parliamentary economics committee on Friday, Bullock cautioned that upside risks to inflation are actively materialising, driven by complex global supply shocks and resilient domestic cost pressures.

The RBA's ability to control inflation is complicated by factors outside domestic monetary policy. Bullock highlighted that persistent global supply shocks are making it increasingly difficult for the central bank to simply look through temporary price spikes. Specific external pressures include the ongoing conflict in the Middle East, the resource demands of the global artificial intelligence boom, and extreme weather events.

The RBA's current strategy is maintaining a restrictive policy setting for a prolonged period, deliberately suppressing consumer demand to force price growth down. However, Bullock noted that policymakers remain vigilant and are not ruling anything in or out, signalling that the threshold for cutting rates remains exceedingly high.