Bullock warns inflation will exceed August forecasts
Reserve Bank of Australia (RBA) Governor Michele Bullock said inflation would exceed August forecasts as global costs and domestic pressures persist. The cash rate target has risen 25 basis points since June and 100 basis points this year.
Price pressures outlast slower growth
Inflation recently ran at 3.5–4 percent, versus a 2–3 percent target.
It fell from 7.9 percent at end-2022 into the target range during 2024 and 2025 before rising again.
August forecasts put its return near the midpoint in late 2027; Bullock now sees higher inflation.
Renewed Middle East conflict has raised energy costs, while AI demand and extreme weather add technology and agricultural price pressures.
Domestic capacity constraints, a tighter-than-assessed labor market and weak productivity also sustain inflation.
Bullock said subdued demand growth remains necessary.
Housing prices have fallen in most capitals but remain around 50 percent above early 2020; household borrowing risks remain contained.
The Board meets next week to assess whether tightening is sufficient.
Cards, tokens and cash
Card surcharging ended October 1 under reforms also reducing interchange fee caps and improving cost transparency.
Several large providers have lowered small-business processing fees.
Following changes to the Payment Systems (Regulation) Act 1998, the RBA plans regulatory priorities by end-2026 and further consultation by mid-2027.
Project Acacia identified potential efficiency and resilience gains from tokenisation.
The Cash Distribution Framework Act 2026 grants crisis-readiness and resolution powers; the RBA designated Linfox Armaguard Pty Ltd and is coordinating implementation with the ACCC.
Transmission is still unfolding
Bullock said the full effects of recent rate increases have yet to reach domestic activity.
Monetary policy targets inflation and employment, not housing prices.
Separately, Armaguard's designation enables intervention if needed but does not itself trigger crisis powers.