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Updated December 15, 2025 \u2014 3:25pm,first published December 15, 2025 \u2014 3:00pm<\/p>\n
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Remove items from your saved list<\/a> to add more.<\/p>\n Save this article for later<\/p>\n Add articles to your saved list and come back to them anytime.<\/p>\n Got it<\/p>\n Reserve Bank governor Michele Bullock has warned the next five years could be marked by a slow-moving global economic decay as the unintended consequences of Donald Trump\u2019s policies to make America great translate into higher costs and slower growth.<\/p>\n In an exclusive interview, Bullock said the fallout from the Trump administration\u2019s global tariff campaign would be similar to the trouble afflicting the British economy from Brexit.<\/p>\n As the first RBA governor to give regular press conferences, she has revealed her approach to communicating with the public \u2013 by trying to explain difficult economic concepts as if she were talking to her mother.<\/p>\n The bank is this week releasing a report into how it has responded to the 51 recommendations made by an independent review of the Reserve that prompted the institution\u2019s most significant changes since it started targeting a 2-3 per cent inflation rate in the early 1990s.<\/p>\n The changes included the creation of a separate committee to set interest rates, regular press conferences to explain decisions and a shift to less regular meetings over two days.<\/p>\n Related Article This has occurred during the largest spike in inflation since the 1980s, international turmoil through wars such as Russia\u2019s invasion of Ukraine and in Gaza, plus economic upheaval driven by the Trump administration\u2019s tariff policies.<\/p>\n Bullock, in an interview with this masthead on Friday, said while the bank\u2019s day-to-day focus was on China and the broader Asian region, the economic issues emanating out of the US were a harbinger of tougher times ahead.<\/p>\n She noted that her deputy, former Bank of England senior official Andrew Hauser, had referenced the turmoil in his home nation caused by its departure from the European Union.<\/p>\n \u201cAndrew often talks about, people said when Brexit was coming it was going to be a disaster. Well, it wasn\u2019t [immediately], it was just a long-term disaster,\u201d she said.<\/p>\n \u201cIt didn\u2019t happen like that [Bullock clicks her finger] \u2013 it\u2019s just been a slow, slow decay.<\/p>\n \u201cThat\u2019s what I think with what\u2019s going on in the world at the moment \u2013 nothing\u2019s falling off a cliff. But I think in five years\u2019 time, we\u2019re gonna look back and we\u2019re going to say that was the start of the [decay].\u201d<\/p>\n Bullock said the problems were directly related to explicit policies by nations to cut themselves off from international supply chains.<\/p>\n \u201c[It means] slowing growth in world trade, increasing tensions, increasing sovereignty over things, growth slower than it should be, [slower] productivity,\u201d she said.<\/p>\n \u201cWhat the US is basically saying, rather than produce things more efficiently somewhere else and bring them in, we\u2019re going to just produce lots of these things ourselves [but] we\u2019re not as efficient as them so it does mean that there\u2019s implications.<\/p>\n \u201cThere\u2019s all these sort of unintended consequences. Most people would have realised there would have been these sorts of consequences.<\/p>\n \u201cAll I\u2019m saying is that it\u2019s just going dampen things down, and things might be a bit more lethargic.\u201d<\/p>\n The Reserve held interest rates steady at 3.6 per cent at its last meeting of the year<\/a> after delivering three cuts through 2025. Financial markets expect the cash rate to rise to 3.85 per cent by August.<\/p>\n Bullock said during previous rate-cutting periods, commercial banks had not passed on in full reductions in the official cash rate. But the full three-quarter of a percentage point cut in rates had flowed through to borrowers.<\/p>\n Related Article \u201cWe\u2019ve possibly got slightly easier financial conditions than we might have had in the past,\u201d she said.<\/p>\n Bullock said it appeared consumers were still reticent to spend consistently in a development that had caught the Reserve by surprise.<\/p>\n While spending has lifted for big one-off events such as the recent concerts by AC\/DC, Oasis and Lady Gaga, Bullock said people were also \u201csocking\u201d away cash in offset and redraw accounts.<\/p>\n \u201cI do think it\u2019s also true that people can splurge on big events, but I do think they tend to offset that a little bit by saying, \u2018I\u2019m doing that, so I\u2019m not going to do that\u2019,\u201d she said.<\/p>\n Some critics argue the bank\u2019s struggle to keep inflation in its target band is due to federal and state government spending. Treasurer Jim Chalmers is expected to confirm a budget deficit this financial year of around $40 billion when he releases his mid-year fiscal update on Wednesday.<\/p>\n Bullock said while governments were conscious of inflation when setting their budgets, they faced numerous demands. The Reserve Bank had to remain focused on just one \u2013 keeping inflation under control.<\/p>\n \u201cI don\u2019t think there\u2019s any point in me telling governments what to do with fiscal policy,\u201d she said.<\/p>\n \u201cI don\u2019t want them telling me what to do with monetary policy, so I think I\u2019m just not going to tell them what to do with fiscal policy.\u201d<\/p>\n Related Article A key part of the Reserve\u2019s reforms has been regular press conferences. Bullock\u2019s predecessor, Philip Lowe, the first governor to hold press conferences, called them only to explain elements of the bank\u2019s extraordinary quantitative easing policies during the pandemic.<\/p>\n Bullock admits she\u2019s not a natural when it comes to media grilling but believes the conferences had now got into a \u201cnice rhythm\u201d. Some economists, however, are upset about the nature of the questions that the governor says often come from the angle of \u201cthe poor old person in the street\u201d.<\/p>\n The governor is unapologetic about her approach, saying her words are aimed at ordinary Australians, including her parents, Nola and Ivan Droop.<\/p>\n \u201cI have tried to explain things in terms that I hope if anyone was listening, I\u2019ve tried to explain it so my mum would understand it,\u201d she said.<\/p>\n \u201cShe and dad watch it. They actually watch it \u2013 they don\u2019t just listen to it.\u201c<\/p>\n Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up to our weekly Inside Politics newsletter<\/a>.<\/p>\n Save<\/p>\n You have reached your maximum number of saved items.<\/p>\n Remove items from your saved list<\/a> to add more.<\/p>\n![\"Michele](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/12\/08c7feb4ceef38a4e6794a71350999ea75f6c2ae.jpeg\")
Michele Bullock at her last press conference of 2025 explaining the direction of interest rate movements.Louie Douvis<\/p>\n![\"RBA](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/12\/a1b1b5998a7bed33c799f4edec4f08b52b6d7a26.jpeg\")
<\/a><\/p>\n![\"Donald](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/12\/eca285f98e00d2c59b3147f21748942680a1a739.jpeg\")
Donald Trump\u2019s economic policies could cause long-term problems for the global economy, according to the head of the Reserve Bank.AP<\/p>\n![\"Michele](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/12\/8ebdc68bd618394f0d051aef38ab0d50be1f3a73.jpeg\")
<\/a><\/p>\n![\"Australians](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/12\/5171b594250dd0b5a7b9e00fff6c452ea9a9696f.jpeg\")
Australians may have splurged on a ticket to Taylor Swift, but they know all too well not to keep on spending.Getty Images<\/p>\n<\/a><\/p>\n![\"Shane](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/12\/1765797314_589_057daa8f1b51682d1d002d4c2720328233762dc5.png\")
Shane Wright<\/a> \u2013 Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.Connect via Twitter<\/a> or email<\/a>.Most Viewed in PoliticsFrom our partners