The Reserve Bank of Australia (RBA) is on course to deliver a fourth consecutive interest rate hike this month after governor Michele Bullock told a parliamentary committee that inflation remains too high and that upside risks are materialising.
Appearing before a parliamentary economics committee, Bullock said the central bank's board was concerned at its last meeting that inflation would come in hotter than hoped, and that those concerns were now being borne out. 'Inflation is too high,' she said, adding that the slowing economy had not yet brought price pressures under control.
Board to weigh three prior hikes against inflation target
The RBA board is scheduled to meet on 28-29 September. Bullock indicated the 'key question' for that meeting will be whether the three rate hikes delivered earlier this year will be sufficient to bring inflation back to the RBA's 2.5% target 'in a reasonable time'.
If the board concludes that they are not, another hike is likely. The governor's comments suggest the central bank is leaning toward further tightening rather than holding steady, even as the broader economy slows.
Upside risks materialise despite slowing economy
Bullock's testimony highlighted a tension between weak economic growth and persistent price pressures. While the slowdown might ordinarily argue for a pause, the RBA's primary concern remains inflation running above target, with recent data pointing to stronger-than-expected price rises.
The governor's remarks were seen as a clear signal that a rate increase is probable at the upcoming board meeting. Financial markets have already priced in a significant chance of a hike, and Bullock's language is likely to reinforce those expectations.
Impact on households and the cost-of-living debate
A fourth consecutive hike would add further pressure to Australian households already grappling with a cost-of-living crisis. Mortgage repayments would rise for many borrowers, and the move could feed into broader political and economic debates about the RBA's approach to taming inflation.
The RBA has been tightening monetary policy aggressively over the past year, and Bullock's latest comments suggest it is not yet ready to declare victory. The September meeting will be pivotal in determining whether the current tightening cycle extends further or begins to plateau.
