RBA Governor Michele Bullock has firmly dismissed any notions that recent positive inflation figures would precipitate an early interest rate cut. While inflation has dropped to its lowest since the pandemic, Bullock emphasised that the Reserve Bank of Australia (RBA) remains cautious about its sustainability. In her speech to the Committee for Economic Development of Australia, she stated that the country is still some way from achieving the target inflation range of 2-3%. Bullock highlighted the significance of assessing temporary factors affecting inflation rather than reacting hastily to short-term changes.
She noted that current unemployment rates, approximately 4.1%, are low compared to historical standards, also hindering the possibility of a rates cut. However, Bullock did acknowledge the potential for inflation to return to target sooner than anticipated, at which point the RBA might reconsider its position. On a broader economic note, she suggested that potential trade tariffs from the US could inadvertently benefit Australia by leading to deflationary effects.
Additionally, Bullock mentioned upcoming reforms to the RBA, which will introduce a dual-board structure focused on interest rate decisions, set to commence in March 2025.