Full Breakdown
RBA Governor Warns Inflation Risks Ahead of Potential Fourth Rate Hike
By Drooid · · How we work
Core Event
In a hearing scheduled for September 18, 2026, Reserve Bank of Australia (RBA) Governor Michele Bullock told the House of Representatives Standing Committee on Economics that inflation remains “too high” and that a range of global pressures are materialising. She highlighted the Middle-East conflict, the artificial-intelligence (AI) boom and extreme-weather events as drivers of higher fuel and commodity prices. Bullock said the board will assess on September 28 and 29 whether the current cash rate of 4.35 percent is sufficient to bring inflation back to target.
Background & Context
The RBA has already raised the benchmark cash rate by 0.75 percentage points in three hikes this year to curb inflation, which it aims to keep near the midpoint of its 2-4 percent target range. Internationally, the Federal Reserve lifted U.S. rates for the first time in more than three years, adding to global monetary-policy tightening.
Data & Statistics
- Current cash rate: 4.35 percent, the highest level in 15 years.
- Inflation target midpoint: 3.5 percent, with a return forecast for late 2027.
- Petrol prices have risen above $2 per litre, driven by disrupted oil supplies from the Middle-East.
- Bond-futures markets priced an 82 percent chance of a 0.25 percentage-point rate increase at the upcoming meeting.
- Westpac, NAB and ANZ have already raised fixed-rate mortgages by up to 0.45 percentage points, adding roughly $91 to monthly repayments on a $600,000 loan.
Official Statements & Responses
Bullock emphasized that the bank’s priority is to “get inflation back down” and prevent it from becoming embedded in price- and wage-setting decisions.
RBA assistant governor Sarah Hunter added that the committee is monitoring the potential impact of the current El Niño on agricultural prices.
Treasurer Jim Chalmers declined to comment on the likelihood of another hike, stating that the Reserve Bank will determine its policy independently.
The International Monetary Fund (IMF) urged the federal and state governments to rein in public spending, which has surpassed $1 trillion, and advised the RBA to remain ready to hike rates as needed.
Criticism & Opposition
Canstar data-insights director Sally Tindall warned mortgage holders that another hike is “on the table,” suggesting that the governor’s comments make a pause unlikely.
Verbatim Quotes
- “We are focused on getting it back down and making sure that it does not become embedded into price and wage-setting decisions.” — Michele Bullock
- “This particular Middle East shock has made us poorer,” — Michele Bullock
- “This is a fundamental challenge for the Australian economy over the next few years” — Michele Bullock
Conflicting Reports & Gaps
Market forecasts differ on the timing of a potential fourth hike. Westpac expects a decision in September, while NAB projects a September move and other banks anticipate a November increase. Bond-futures pricing indicates a high probability of a September hike, but no consensus exists on the exact magnitude or timing beyond the scheduled board meeting.
What’s Next
The RBA board will convene on September 28 and 29 to decide whether to raise the cash rate further. The outcome will shape mortgage costs, consumer spending and the broader trajectory of Australian inflation in the months ahead.