RBA Leaves Door Open for Another Rate Hike as Inflation Lingers

RBA Governor Michele Bullock hinted at another interest-rate hike in Australia. Despite not promising one, she said inflation is still too high and rates could rise again if demand and the labor market don't cool down.

Bullock emphasized that the Reserve Bank of Australia (RBA) thinks the inflation job isn't finished. She noted that underlying inflation is above the RBA's 2%-3% target band and slower growth in spending may be needed to bring it back sustainably.

The labor market remains tight, with firms trying to pass higher costs on to customers, which keeps price pressures alive. Market pricing still factors in one more increase this year to around a 4.6% cash rate, with an August move only partially priced.