RBA Governor Michele Bullock pushed back against the market’s initial interpretation of a divided board, emphasizing that the 5–4 split in the decision on today’s 25bps hike reflects a debate over “timing” rather than “direction”. She stressed that all members agree inflation remains too high and that further policy tightening will be required, with those voting to hold doing so in what she described as a “hawkish” sense.
Bullock highlighted that underlying inflation pressures remain firmly rooted in domestic “excess demand”. Additionally, she made clear that while rising fuel costs from the Middle East conflict will add to inflation, they were “not the reason for today’s decision”. Instead, the decision was driven by persistent demand-driven price pressures.
The governor also indicated that the RBA would act to prevent inflation from becoming entrenched, even at the risk of recession. “We don’t want to have a recession, but if it’s hard to get inflation down, then you know we’re going to have to deal with that, possibly,” she said.
Meanwhile, she stopped short of explicitly endorsing further hikes in the near term. “I can’t say whether or not this has just ended up being a front loading or the first of many [rate hikes].”
But, with policymakers focused on bringing demand back into balance, the path ahead remains data-dependent, the message is clear: the RBA is united in its inflation fight, even if divided on how quickly to proceed.
