Summary:
Michele Bullock is appearing before the Senate Economics Committee amid fresh scrutiny of monetary policy after the RBA raised rates.
The RBA recently lifted the cash rate by 25 bps to 3.85%, the first hike in more than two years, citing persistent inflation pressures.
Inflation remains above target, and Deputy Governor Andrew Hauser has reinforced that the bank stands ready to do “whatever is necessary” to push inflation back to target.
Strong demand, tight labour conditions, and supply constraints are cited as ongoing drivers of inflation.
Markets are pricing in a circa 75–85% chance of at least one more hike by mid-2026, though views vary across economists.
In her Senate Economics Committee appearance, Michele Bullock will likely defend the Reserve Bank of Australia’s recent return to a tightening stance. On 3 February 2026, the RBA board raised the cash rate by 25 basis points to 3.85%, reversing part of last year’s easing cycle, the first hike in over two years, as inflation proved more resilient than expected.
Bullock has underscored that inflation has risen materially, with stronger private demand, tighter capacity pressures and labour market conditions contributing to persistent price growth above the bank’s 2–3% target range. Analysts note this was not a surprise to markets but signals the RBA’s willingness to tighten if conditions warrant.
In recent commentary, RBA Deputy Governor Andrew Hauser reinforced a hawkish undertone: inflation remains “too high,” and the bank will do “whatever is necessary” to return it to target, even as some forces behind inflation could be temporary.
Bullock’s testimony is happening against broader debate on policy drivers. There’s pushback from some quarters (e.g., Treasurer Jim Chalmers) on whether government spending has contributed to inflation, a point Bullock has acknowledged publicly while maintaining monetary policy independence.
Looking ahead, the RBA’s path remains data dependent. While inflation pressures are expected to ease gradually, the combination of resilient demand and constrained supply suggests the board could leave rates higher for longer or consider further increases if inflation doesn’t sufficiently moderate. Markets currently ascribe a high probability to another rate hike by mid-2026, though the scale and timing remain uncertain.
In her appearance now Bullock opened by saying an inflation rate with a 3 in front of it was unacceptable
