Bullock warns inflation risks mount after 75bp rate increases
Reserve Bank of Australia Governor Michele Bullock told lawmakers that inflation risks are materialising despite 75 basis points in rate increases this year. Speaking to a parliamentary committee, she noted underlying inflation remains above 3.5 percent.
Upside price pressures materialise
The Reserve Bank of Australia has lifted its cash rate target by 50 basis points since February, bringing cumulative tightening to 75 basis points in 2026.
Headline and underlying inflation remain above 3.5 percent, well above the 2–3 percent target range.
Governor Michele Bullock told the House Economics Committee that inflation is not projected to return to the midpoint of the target range until late 2027.
Bullock noted that upside risks identified in August are now materialising due to higher oil prices from the Middle East conflict, supply bottlenecks from the global artificial intelligence boom, and domestic capacity constraints.
“Monetary policy is well placed to respond,” she stated.
Resilient buffers soften housing downturn
The domestic labour market remains tight, with unemployment at 4.5 percent and employment near record highs.
While housing prices have softened across most capital cities, Bullock stressed that financial stability risks remain contained because borrowers hold substantial savings buffers and negative equity is very limited.
On regulatory fronts, card surcharges will be abolished on October 1, 2026, alongside reduced interchange caps.
The central bank also designated Linfox Armaguard under new cash framework laws.
Caught between persistence and pain
The testimony makes clear that the RBA will not hesitate to deliver further rate increases if cost pass-through accelerates.
By pushing the disinflation timeline out to late 2027, the central bank signals an extended period of restrictive policy.
For indebted households, this confirms that borrowing relief remains distant.