{"id":852038,"date":"2026-08-12T01:12:10","date_gmt":"2026-08-12T01:12:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/852038\/"},"modified":"2026-08-12T01:12:10","modified_gmt":"2026-08-12T01:12:10","slug":"the-rba-likely-believes-it-wont-need-to-hike-rates-again-but-the-worst-thing-it-could-do-is-say-that-out-loud-reserve-bank-of-australia","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/852038\/","title":{"rendered":"The RBA likely believes it won\u2019t need to hike rates again \u2013 but the worst thing it could do is say that out loud | Reserve Bank of Australia"},"content":{"rendered":"

Every parent makes threats in an effort to get their kids to behave \u2013 and every parent hopes they won\u2019t have to follow through.<\/p>\n

Some (most?) parents even make threats they have zero intention of carrying out.<\/p>\n

There\u2019s more than a whiff of this strategy coming through in the Reserve Bank\u2019s communication.<\/p>\n

The RBA board in a unanimous decision held rates at 4.35%<\/a> on Tuesday, as was widely anticipated.<\/p>\n

The last time they hiked rates<\/a> was in May, so about three months ago.<\/p>\n

Lots of water has flowed under the bridge during that relatively brief time, but the central bank\u2019s latest forecasts show inflation still getting back to around the RBA\u2019s 2.5% target in about a year\u2019s time.<\/p>\n

The impact of the Middle East and high fuel prices<\/a> has not proved as immediately inflationary as feared, although the lingering effects of the global oil shock could take 1-2 years to fully flow through the system.<\/p>\n

And after three back-to-back rate hikes earlier in the year, \u201cthe economy appears to be slowing as expected\u201d, the RBA board said in its statement.<\/p>\n

Even the housing downturn<\/a> is leaning against the need for another rate hike (although what\u2019s happening in the property market \u201cis not the main game\u201d and won\u2019t stop them hiking again if they need to).<\/p>\n

Sign up for the Breaking News Australia email<\/a><\/p>\n

But in her press conference, Michele Bullock did not sound like a central bank governor who believes things are breaking her way.<\/p>\n

\u201cInflation remains too high, and the board remains concerned about the upside risks,\u201d Bullock told journalists after the rate announcement.<\/p>\n

\u201cWe\u2019ve already raised three times, and we will go again if we need to.\u201d<\/p>\n

Bullock even delivered a rare personal view on what she thought would happen.<\/p>\n

\u201cAnd I think, personally, that it\u2019s quite possible we might need to go, but we\u2019ll wait and see what the data tells us,\u201d she said.<\/p>\n

The RBA\u2019s governor Michele Bullock speaks during a press conference in Sydney. Photograph: Hollie Adams\/Reuters<\/p>\n

Bullock and the RBA\u2019s rate-setting board really, really want us to know they are prepared to hike again.<\/p>\n

Again, this is despite the fact that inflation has come in lower than expected since the board last met, and unemployment a little higher.<\/p>\n

Yet, if anything, Bullock\u2019s warnings have become even more strident.<\/p>\n

Why? Because at this point in the cycle, and despite their protestations, it\u2019s highly likely that the board hopes and believes it won\u2019t need to hike again.<\/p>\n

But the worst thing bank officials can do is say that out loud.<\/p>\n

As Bullock said: \u201cIt\u2019s important people believe that we will act if we need to.\u201d<\/p>\n

That heightened expectation of another rate hike can do a lot of the RBA\u2019s work for it.<\/p>\n

Look at financial markets: the implied chance of another cash rate increase by the end of this year jumped from 53% before the decision, to 67% by the time Bullock had wrapped up her press conference.<\/p>\n

This is the real power of central bank \u201cjawboning\u201d, as we used to call it.<\/p>\n

Bullock and her fellow board members will be hoping inflation behaves before we all stop believing they will follow through on their threats.<\/p>\n","protected":false},"excerpt":{"rendered":"Every parent makes threats in an effort to get their kids to behave \u2013 and every parent hopes…\n","protected":false},"author":2,"featured_media":852039,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164],"class_list":["post-852038","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/852038","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=852038"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/852038\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/852039"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=852038"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=852038"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=852038"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}