- Not ruling out further tightening if needed
- Understand that current situation is difficult for households
- But that is why it is important for us to get on top of inflation
- Reports of a peace deal in the Middle East is good news
- Flow of data has been consistent with our expectations
More comments from the Q&A session:
- We already had an inflation problem before the Middle East conflict
- If oil prices settle down and supply chains settle, that will help with inflation so that it doesn’t get super-charged
- But we still need to ensure that the inflation problem before the war is addressed
- Unless we have low and stable inflation, we won’t have a good economy
- People should not be surprised to see a slowdown in the economy as we address inflation
- This has to happen, we have to get inflation back down
- Underlying inflation is “dead on where we thought it would be”
- Cannot rule out that if inflation doesn’t respond to the way we expect it to do, then we might have to do more
There’s nothing from Bullock that really stands out too much.
The signal is clear that the RBA is stepping to the sidelines in wanting to assess the overall situation further for now. As for their next step, it will depend on how economic developments play out.
She is not going to explicitly rule out rate hikes nor will she choose to play down the need for rate cuts next year. And that fine line is what the central bank will be keeping as they move forward with policy setting for the months ahead.
As things stand, traders are pricing in just ~13 bps of rate hikes by year-end. However, that pricing shifts back to pricing in ~1 bps of rate cuts by August next year.
