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RBA Governor Michele Bullock says next rate move depends on inflation

Bullock said the RBA raised the key rate 25 bps to 4.60% from 4.35% and that domestic capacity pressures and longer-than-expected inflation were central to the decision.

Reported · Written up by our desk · Central Banks

FXStreet reports that Reserve Bank of Australia Governor Michele Bullock, speaking at the central bank's press conference, tied the latest policy move to domestic capacity pressures and said inflationary pressures are expected to last longer than previously anticipated.

Bullock said the board will raise rates again if needed, adding that the decision was meant to bring excess demand down while noting a recession is not the RBA's central case.

She also said the RBA considered both a pause and a 25-bps hike, emphasized keeping tight financial conditions, and played down placing too much emphasis on the August CPI figure.

Bullock said the Middle East has made inflation conditions worse, longer conflicts could increase the likelihood of businesses passing on costs, and that bond markets are reacting in an orderly way while the RBA continues to watch closely.

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