RBA Governor warns inflation high, hints at further hikes

Reserve Bank of Australia Governor Michele Bullock warned on Tuesday, July 28, 2026, that underlying inflation remains too high and signaled the central bank is prepared to raise interest rates again if necessary to bring price growth back to its target. Speaking at the Anika Foundation lunch in Sydney, Bullock said policymakers are still assessing whether the three interest rate hikes delivered earlier this year are sufficient to curb persistent inflation.

The central bank raised the official cash rate at its first three meetings of 2026, taking it to 4.35 percent and reversing the rate cuts of 2025. Bullock stated that while the full impact of these increases has yet to be felt, a further slowdown in domestic demand is likely required to sustainably return inflation to the bank's 2 to 3 percent target band. She emphasized that the labor market also needs to cool further to ease price pressures.

A key uncertainty, according to Bullock, is whether the monetary tightening already delivered will be enough. She affirmed the board's readiness to act, stating it is prepared to increase the cash rate further if needed. This stance has reinforced financial market expectations, which...