Reserve Bank boss’s Michele Bullock’s disturbing hint that a fresh interest rate rise is on the horizon – as she keeps mortgage payments on hold this month

Michele Bullock has strongly hinted interest rates could go up again in coming months in her first historic board meeting as Reserve Bank governor.

Interest rates on Tuesday were left on hold at an 11-year high of 4.1 per cent. 

But Ms Bullock has suggested the pain may be far from over with inflation in August climbing to 5.2 per cent, up from July’s 4.9 per cent level.

This put the consumer price index further above the Reserve Bank’s two to three per cent target, as petrol prices soared by 14 per cent over the year.

‘Inflation in Australia has passed its peak but is still too high and will remain so for some time yet,’ Ms Bullock said.

‘There are significant uncertainties around the outlook. 

‘Services price inflation has been surprisingly persistent overseas and the same could occur in Australia.’

Michele Bullock has strongly hinted interest rates could go up again in her first board meeting as Reserve Bank governor

The August increase marked the first monthly deterioration in the annual headline inflation rate since April – with the cost of living worsening for the second time since it peaked at a 32-year high of 8.4 per cent last December.

Ms Bullock strongly hinted another rate rise was possible to get inflation back to target by June 2025, as Australians grapple with a 13 per cent increase in electricity and gas bills and double-digit rises for bread and dairy products.

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‘Returning inflation to target within a reasonable timeframe remains the board’s priority,’ she said.

‘High inflation makes life difficult for everyone and damages the functioning of the economy.’

The futures market is worried, with investors who bet on monetary policy now expecting a rate rise in early 2024.

National Australia Bank is expecting a rate rise in November following the release of inflation data for the September quarter, making it the only one of the Big Four banks – for now – to be forecasting another rate increase.

Ms Bullock last month replaced Philip Lowe as Australia’s most powerful banker, following anger at the RBA’s 12 rate rises in little more than a year, with the last increase occurring in June.

This marked the most aggressive pace of monetary policy tightening since 1989, causing monthly mortgage repayments to surge by 63 per cent since the cash rate rose from a record-low of 0.1 per cent.

Tuesday’s board meeting was the first ever chaired by a woman since the Reserve Bank debuted in 1960. 

She replaced Philip Lowe on September 18, after his suggestion in 2021 that rates would stay on hold until 2024 ‘at the earliest’ led to Treasurer Jim Chalmers declining to extend his term to 10 years. 

From next year, a specialist monetary board will decide interest rates, with six out of nine members to be part-timers outside the Reserve Bank. 

Interest rates on Tuesday were left on hold at an 11-year high of 4.1 per cent (pictured is a stock image)

The futures market is worried, with investors who bet on monetary policy now expecting a rate rise in early 2024