RBA Signals Further Interest Rate Hikes if Inflation Persists, Says Governor Michele Bullock

Reserve Bank of Australia (RBA) Governor Michele Bullock has warned that additional interest rate hikes remain possible if inflation in Australia becomes entrenched, underscoring the central bank’s firm commitment to restoring price stability. Speaking before the Senate Economics Legislation Committee on Thursday, Bullock emphasized that future monetary policy decisions will depend heavily on incoming economic data, particularly inflation trends.

The RBA recently raised the official cash rate by 25 basis points to 3.85%, marking its first rate increase in two years. The move followed a late-2025 resurgence in inflation, with underlying price pressures climbing back above the central bank’s 2% to 3% annual target range. The rebound in inflation during the second half of 2025 has intensified scrutiny over Australia’s economic outlook and the trajectory of interest rates.

Bullock told lawmakers that while it remains uncertain whether further tightening will be required, the RBA stands ready to act if inflation proves persistent. She reiterated that the central bank’s primary mandate is to maintain price stability and support sustainable economic growth. “If we need to go up further because inflation is entrenched, the board will do so,” she stated, reinforcing the RBA’s readiness to implement additional rate hikes if necessary.

The governor also highlighted the RBA’s data-driven approach, noting that policymakers will closely monitor inflation data, labor market conditions, and broader economic indicators before making any future adjustments. Financial markets and investors are now watching closely for signals on whether Australia’s interest rates will rise again in 2026.

As Australia grapples with renewed price pressures, the RBA’s next moves will be critical in shaping borrowing costs, mortgage rates, and overall economic stability.