Bullock: Hold call doesn’t rule out further tightening, if that’s required to beat inflation

Michele Bullock has made it very clear that the Reserve Bank is still strongly considering more rate hikes, especially if it’s the only way to “deliver price stability and full employment” across Australia in CY26 and beyond.

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“The board is focused on its mandate,” the board members declared on Tuesday afternoon after June’s meeting. “It will do what it considers necessary to achieve that outcome, including increasing the cash rate, if required.”

Bullock doubled down when she addressed media at 3.30PM, pointing out there have been a lot of doubters – but that the RBA will do what they must.

“Today’s decision does not rule out further tightening in monetary policy if that is what is required to bring inflation down,” the RBA governor warned Australians in her post-meeting address. “In making its decisions, the board will be focused on the data and what that suggests about the outlook and risks.”

“We expect it will take a further unexpected weakening in the domestic economy – and a better inflation outlook – to entirely prevent further hikes from here.”

She did then go on to add that she sees Australia in “a better position” than it was at the start of the year, but still wants slower economic growth.

“Unless we have low and stable inflation, we’re not going to be able to have an economy with a good level of employment that grows as well as it can,” she said, adding there’s a target the RBA will watch. “We estimate the economy can only grow by ~2%. Much stronger growth… is going to cause inflation.”

Interestingly, most analysts don’t really believe Bullock, despite how strongly she’s said, again and again, that hikes are still on the table. For most, it’s a 50-50 call on whether we’ll see any more rises in the 2020s.

Commonwealth Bank says that there will “likely be cutting” next year, while the ANZ and NAB are tipping two and three chops in CY27. Westpac is the only Big 4 bank still tipping more hikes before Bullock starts cutting.

The next cash rate call is set for Tuesday, August 11.

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