RBA's Bullock: inflation will likely be higher than the August forecast

Victoria Shinder02 November 2026, 08:572 min read

Reserve Bank of Australia Governor Michele Bullock told the Senate Economics Legislation Committee on 28 October that inflation will likely be higher than the bank's August base case. Her opening statement, delivered by videoconference and published by the BIS on 29 October, noted that the Monetary Policy Board has raised the cash rate target by 25 basis points since the committee's June hearing, taking the cumulative increase this year to 100 basis points.

Inflation fell from a peak of 7.9% at the end of 2022 into the 2–3% target range for a period in 2024 and 2025, but picked up in the second half of 2025 and has recently been around 3½ to 4% in year-ended terms. The August forecasts did not see a return to the midpoint until late 2027, with risks skewed to the upside. Since then, Bullock said, some of those risks have materialised: the conflict in the Middle East has re-escalated and energy prices are much higher than assumed, short-term inflation expectations are elevated, and the AI boom and extreme weather are pushing up some agricultural and technology prices. She stressed that domestic capacity pressures, not only global ones, are driving inflation, and that the labour market looks a little tighter than previously judged despite a rise in unemployment.

Housing prices have fallen in most capital cities and new housing loans have declined, she said, while adding that monetary policy does not target housing prices. The board meets next week, and a key question, in her words, is whether the tightening to date will be sufficient to bring inflation back to target in a reasonable time.

What it means

Central bankers rarely pre-announce, and Bullock did not. But the statement's structure is the case for doing more rather than less: forecasts revised up, risks materialising, domestic pressures named explicitly, and housing weakness acknowledged and set aside. The question she posed is the one the board will answer this week, and the statement leaves little doubt about which direction its risks point.