RBA Bullock: Will Not Hesitate To Raise Rates If Needed

• Published on
• 08 Aug 2024, 12:59 PM

--Board explicitly considered whether another rate rise was required
--Vigilant to upside inflation risks; will not hesitate to raise rates if needed
 

By Sophia Rodrigues

(Sydney, August 8, 2024) – The Reserve Bank of Australia remains vigilant to upside risks on inflation and will not hesitate to raise rates if needed, Governor Michelle Bullock said in a speech Thursday.

Bullock made the comments in a speech titled, “Economic conditions in post-pandemic Australia with a regional lens” addressed to the Rotary Club in Armidale in regional Australia.

Bullock’s comments are similar to the one she made in response to a question at the media conference following the August decision on Tuesday.

In the speech, she said, “The Board remains vigilant with respect to upside risks on inflation and will not hesitate to raise rates if it needs to.”

Bullock said the Board “explicitly” considered whether another cash rate increase was required to ensure inflation continues to decline in a reasonable timeframe because it is not expected to be back in the target range until the end of 2025 – over a year away. But it decided “on balance” to hold, judging that such an outcome would still meet the mandate to balance inflation and employment objectives.

The RBA’s expectation for when inflation will come back to target was pushed out in the latest forecasting round.

At the meeting, the Board noted two things:

--the gap between aggregate demand and aggregate supply in the economy is larger than previously estimated

--Demand growth looks like it will pick up over the next year, though there is considerable uncertainty around the outlook.

--Contact: Sophia@centralbankintel.com