Overview
- Reserve Bank governor Michele Bullock told senators on Thursday that the RBA has raised the cash rate three times this year to 4.35% and is closely tracking how those hikes and the global energy shock affect the economy.
- Officials reported early signs that tighter policy is slowing demand, citing weaker housing prices and falling household spending as evidence that tightening is transmitting through the economy.
- Inflation remains above target with headline CPI at 4.2% in April and the RBA’s trimmed-mean measure at 3.4%, and the bank warned that sustained higher oil prices could feed through to other goods and services.
- Treasury highlighted the scale of the energy shock by noting April crude imports jumped to $8.2 billion, and RBA staff expect growth to slow to about 1.4% by June 2027 while judging a wage-price spiral or stagflation to be unlikely.
- The bank said the full effects of recent rate rises will take one to two years to unfold and told Australians to watch wage moves, inflation expectations, oil supply developments and market pricing for signs of further policy action.