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RBA Governor Bullock says more tightening may be needed on inflation

Bullock noted that the full effects of this year’s rate increases have not yet been felt due to policy lags, while housing has eased more than expected and demand growth is moderating.

Reported · Written up by our desk · Central Banks

Reserve Bank of Australia Governor Michele Bullock said the key issue is whether the tightening already delivered is sufficient to slow inflation, adding that the RBA is board ready to raise the cash rate further if needed, according to FXStreet.

Bullock argued that monetary policy works with a lag, so the full impact of this year’s rate increases has yet to be felt, and she said some further easing in growth of demand and in the labor market is likely required to bring inflation down. Underlying inflation remains too high, and business feedback points to continuing non-labor cost pressures picking up.

She also said it is too early to assess the full economic effects of the oil shock, while noting the economy has adjusted gradually and broadly as expected and that the housing market has eased by more than anticipated.

FXStreet reported that the Australian dollar showed little reaction to Bullock’s comments, with AUD/USD trading below 0.7000 as of writing.

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