RBA Governor’s Comments on Interest Rates

Reserve Bank of Australia Governor Michele Bullock stated on Thursday that interest rates are currently restrictive enough and will remain at these levels until there is confidence in easing inflation.

During her speech at the ASIC Annual Forum in Sydney, Bullock highlighted the uncertainty in the U.S. economic outlook, which would keep the bank cautious. She mentioned the risk of potentially inflationary policies under Donald Trump.

Bullock’s remarks strengthened beliefs that Australian interest rates will not increase further, echoing the RBA's stance in recent meetings.

> "We're not as restrictive as others (central banks), even as they are lowering their interest rates. We think we're restrictive enough, and we're going to stay restrictive enough until we think we've definitely got that downward trajectory in demand," Bullock stated.

The RBA maintained its benchmark cash rate at 4.35% last week, marking one year since the last rate hike. While acknowledging that inflation has cooled according to its expectations, the RBA also noted that price pressures remain high, necessitating steady interest rates until inflation risks are more manageable.

The RBA indicated that future policy decisions are still open-ended. Analysts from ANZ and Westpac predict that the RBA may start cutting rates by the first quarter of 2025, though potential inflationary risks could delay this.

Despite a decrease in consumer price index inflation in the September quarter, core inflation continues to hover above the RBA's target range of 2% to 3%.