2026.07.2803:39:09UTC+00Australia Underlying Inflation Still Too High: RBA Gov Bullock

Australia’s underlying inflation remains uncomfortably high, and a further slowdown in domestic demand may be required to return price growth to the Reserve Bank’s 2%–3% target range, Governor Michele Bullock said in a speech on Tuesday. She cautioned that it is still unclear whether the three interest rate increases implemented so far this year will be enough, as their full effects have yet to work through the economy.

Bullock warned that underlying inflation could rise again if higher oil prices, driven by the conflict involving Iran, continue to feed into broader cost pressures. She also emphasized that conditions in the labor market must soften further. “The board is prepared to act as required to achieve its mandate, including by increasing the cash rate further if needed,” she said.

The recent surge in oil prices, she noted, underscores the ongoing uncertainty stemming from the war in the Middle East, with an increasing number of businesses signaling plans to pass higher input costs on to consumers. At the same time, overall economic growth is slowing broadly in line with expectations, while the housing market has weakened more than the Reserve Bank had anticipated.