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Reserve Bank boss Michele Bullock’s worrying hint that another interest rate rise is on the horizon – as she keeps her mortgage repayments on hold this month
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Michele Bullock strongly hinted that interest rates could rise again in the coming months during her historic first board meeting as Reserve Bank governor.
On Tuesday, interest rates remained unchanged at their highest level in 11 years, at 4.1 percent.
But Ms Bullock suggested the pain may be far from over, with inflation in August reaching 5.2 per cent, up from 4.9 per cent in July.
This put the consumer price index still above the Reserve Bank’s target of 2 to 3 per cent, with petrol prices soaring 14 per cent over the year.
“Inflation in Australia has passed its peak but remains too high and will remain so for some time to come,” Ms Bullock said.
“There are great uncertainties about the outlook.
“Service price inflation has been surprisingly persistent overseas and the same could happen in Australia.”
Michele Bullock strongly hinted that interest rates could rise again during her first board meeting as Reserve Bank governor.
August’s increase marked the first monthly deterioration in the annual headline inflation rate since April – with the cost of living worsening for the second time since its 32-year peak of 8.4 percent, in last December.
Ms Bullock strongly suggested another rate hike was possible to bring inflation back to target by June 2025, as Australians grapple with a 13 per cent rise in electricity and utility bills. gas and double-digit increases for bread and dairy products.
“Further tightening of monetary policy may be necessary to ensure that inflation returns to its target within a reasonable time frame, but this will continue to depend on data and evolving risk assessments,” he said. she declared.
“Returning inflation to its target within a reasonable time frame remains the board’s priority.
“High inflation makes life difficult for everyone and harms the functioning of the economy.”
The futures market is worried, with investors betting on monetary policy now expecting a rate hike in early 2024.
The National Australia Bank expects a rate hike in November following the release of September quarter inflation data, making it the only one of the big four banks – for now – to forecast a further hike rates.
Ms Bullock replaced Philip Lowe as Australia’s most powerful banker last month, following anger over the RBA’s 12 rate hikes in just over a year, with the latest increase taking place in June.
This is the most aggressive pace of monetary tightening since 1989, causing monthly mortgage payments to rise 63 percent since the cash rate fell from a record low of 0.1 percent.
Tuesday’s board meeting was the first chaired by a woman since the Reserve Bank was established in 1960.
On Tuesday, interest rates remained unchanged at their highest level in 11 years, at 4.1 percent (stock photo).
The futures market is worried, with investors betting on monetary policy now expecting a rate hike in early 2024.
She replaced Philip Lowe on September 18, after his suggestion in 2021 that rates would remain unchanged until 2024 “at the earliest” led Treasurer Jim Chalmers to refuse to extend her term to 10 years.
From next year, a specialist monetary board will decide interest rates, with six out of nine members working part-time outside the Reserve Bank.
Former RBA governor Ian Macfarlane fears Ms Bullock could be outnumbered, leading her to defend a rate rise she might disagree with.