Reserve Bank of Australia Governor Michele Bullock has characterised the nation’s monetary policy as “marginally tight”, indicating that her work in guiding interest rates is not yet complete. Speaking at a forum in Washington, Bullock stated that the current policy is neither truly restrictive nor accommodative, but rather “probably still a little on the tight side but not much.”
The RBA maintained interest rates at 3.6 per cent last month, following three prior easings since February. This decision reflects a cautious approach as the central bank awaits further confirmation that inflation is moving towards the midpoint of its 2-3 per cent target range. Bullock also commented on the Australian economy’s output gap, suggesting it is nearing balance. She cautioned that the potential impacts of President Donald Trump’s import taxes on major trading partners may take several years to fully materialise, disagreeing with the market perception that trade disruptions pose limited economic harm.
Bullock’s recent remarks follow her testimony before a parliamentary committee where she described Australia’s economy as being in a “pretty good spot,” highlighting that inflation is within the target band and the labour market remains tight. Economists are anticipating a fourth rate cut from the RBA this year after their upcoming November meeting. The third-quarter inflation report, scheduled for release on October 29, is expected to play a crucial role in shaping the RBA’s decision.
Prior to the board meeting, officials will also assess the September jobs data, anticipated to reveal a slight increase in the unemployment rate to 4.3 per cent. The RBA’s recent decision to hold rates steady contrasts with the actions of other central banks in the region, where Indonesia and New Zealand have continued to ease policies to bolster growth amidst ongoing trade tensions. Conversely, Thailand and Malaysia have chosen to maintain their rates to evaluate the effects of previous cuts.
