RBA Hints at Rate Hike Uncertainty Amid Inflation Concerns

The Reserve Bank of Australia (RBA) has left interest rates at 4.35%, as widely anticipated, in its latest decision. The RBA board's unanimous decision comes after three back-to-back rate hikes earlier this year.

Despite inflation still being above the RBA's target of 2.5%, and the lingering effects of the global oil shock taking 1-2 years to fully flow through the system, the central bank seems to believe that things are breaking its way. However, in her press conference, Governor Michele Bullock sounded cautious, stating that 'inflation remains too high' and that the board is concerned about upside risks.

Bullock emphasized that the RBA has already raised rates three times and will do so again if needed. She even delivered a rare personal view on what she thought would happen, saying it's 'quite possible we might need to go, but we'll wait and see what the data tells us.'

Despite this, Bullock's warnings have become more strident over time. Experts speculate that the RBA board hopes and believes it won't need to hike rates again, but the worst thing they can do is say so out loud.