Michele Bullock: speeches

1. Policy decisions and inflation

Governor Michele Bullock tells a Senate committee that the board has raised the cash rate target by a further quarter point since June, bringing this year's total tightening to a full percentage point. Inflation, which had fallen from its 7.9% peak back into the 2 to 3% target band during 2024 and 2025, rose again in the second half of 2025 and now runs around 3.5 to 4%. Her warning is that prolonged deviation from target can embed itself in expectations, prices and wages. August forecasts saw a return to the target midpoint only in late 2027, and several upside risks have since materialised.

2. Global and domestic pressures

The Middle East conflict has re-escalated and energy prices are far above the August assumptions, feeding directly into prices and indirectly through transport costs. Short-term expectations are high, and the AI boom and extreme weather push up farm and technology prices. Still, much of the problem is homegrown: underlying measures excluding volatile items show demand-driven pressure, the labour market looks tighter than thought, and weak productivity means stronger growth would quickly add price pressure. A further period of subdued demand growth is therefore needed. Policy works with a lag, so recent increases have not fully acted.

3. Activity, housing and households

Effects of the conflict on activity have been modest, household spending is cooling gradually, and business investment is strong because of data centres and renewable projects. Housing has softened, with prices lower in most capitals, though still about half above early 2020, and risks from household borrowing remain contained because few borrowers face severe difficulty. She stresses the bank does not target house prices. She acknowledges the pain of higher repayments but argues persistent inflation hurts everyone, especially people with low incomes and few savings.

4. Payments, innovation and cash

A reform package ended card surcharging from 1 October and cuts interchange caps, and large providers have lowered fees for small businesses. A wider review of payment regulation covers mobile wallets, account-to-account transfers and agent-driven commerce, with priorities due by end-2026. Following Project Acacia, the bank is consulting on letting its settlement services support tokenised markets. On cash, new legislation gives it crisis-readiness and resolution powers, and the armoured-cash firm Linfox Armaguard has been designated, which only signals the ability to act if needed.

1. The occasion

The Governor of the Reserve Bank of Australia returned to the University of New England in Armidale, the regional town where she grew up, to receive an alumni award and an honorary doctorate. She used the ceremony to speak to new graduates about careers rather than about interest rates. Her father once ran the university's mainframe data processing, which gave the visit a family dimension.

2. A career that was never planned

She recalled hesitating at seventeen between a place in medicine in Sydney and economics at home. A conversation with the head of the economics faculty, who told her that university economics relied heavily on mathematics, tipped the balance. A summer cadetship at the central bank in her third year then led to an honours year and, in 1985, a permanent job as a graduate economist. Her advice is to accept interesting offers even when their destination is unclear.

3. Purpose

Central banking looks like a world of figures: prices, jobs, forecasts and rate decisions. She argued that its real subject is people, since Parliament asks the bank to serve the prosperity and welfare of Australians. Knowing how one's work feeds into something bigger is, in her view, what keeps a person going through difficult periods, whatever the profession.

4. Perspective

Graduates from science, farming, business and law will meet colleagues with very different backgrounds. She sees this variety as a strength: the members of the bank's monetary policy board come from contrasting careers, which improves debate and decisions. Her regional upbringing makes her attentive to differences between parts of the country. The bank's liaison program with firms and communities, and a visit she once made to a national debt counselling service, showed her realities that aggregate statistics hide. She wants economics to attract people from a wider range of communities.

5. Change and technology

Automation and artificial intelligence are reshaping work, and nobody can yet say how. She noted that this has happened before: the bank's large typing pool vanished within a few years of her arrival, while new skills became essential. Because the most useful skills are hard to foresee, she put the emphasis on lasting human qualities: sound judgement, honesty, flexibility, teamwork and good working relationships, which technology can assist but not replace.

6. Closing message

Having a precise plan or not having one are both acceptable, since the openings that shape a career are often invisible at the start. She encouraged graduates to keep a clear purpose, listen to people unlike themselves and treat change as a source of opportunity, and she invited some of them to apply to the central bank one day.

1. Inflation back above target

In her opening statement to an Australian parliamentary committee, RBA Governor Michele Bullock explained that the Monetary Policy Board has raised the cash rate by 50 basis points since February, 75 this year, because inflation, after returning to the 2-3% band in 2024-25, rose again in the second half of 2025 and now runs around or slightly above 3.5%. She blames domestic capacity pressure plus the Middle East conflict, which lifts fuel prices directly and, as firms pass on costs, indirectly. Forecasts put inflation back near the target midpoint only in late 2027. Unemployment of 4.5% shows a labour market a little tighter than full employment.

2. Risks and the housing market

Upside inflation risks are materialising: global cost pressure from the Middle East, the AI boom and extreme weather; firms passing on higher input costs; and a risk that capacity strain worsens pass-through. Growth is slowing and the full effect of past rises is still to come, but business investment, mainly data centres and renewables, is strong, and weak productivity means the economy cannot grow quickly without adding inflation. Housing prices have eased but remain about 50% above early 2020, few borrowers are in negative equity and savings buffers are large, so financial stability risks look contained. She stressed that policy does not target house prices; they matter through wealth, turnover and construction. Whether tightening so far is enough will be examined at the next meeting, and she acknowledged the pain for mortgage holders while insisting that high inflation hurts everyone, especially lower incomes.

3. Payments, cash and tokenisation

On payments, card surcharging will be banned from 1 October alongside lower interchange caps and more transparent costs; a wider review of payments regulation will publish priorities by the end of 2026, covering mobile wallets, three-party schemes, direct bank-to-bank transfers and AI-agent purchasing. Project Acacia found that tokenisation plus new settlement infrastructure could improve efficiency and resilience; a consultation on the bank's own settlement system follows, a tokenisation sandbox is being explored, and there is still no clear case for a retail digital currency. For cash, about half of Australians use it weekly; a new law gives crisis powers, the cash carrier Linfox Armaguard has been designated, and the ACCC will oversee pricing and access.

4. A more open RBA

She finished by reporting that the bank has completed the remaining recommendations of its independent review, including a framework for extra policy tools and an external expert advisory group, and is committed to continuous improvement in governance, risk and resilience.

1. Why statistics matter

Opening remotely the thirteenth biennial gathering of the central bank statisticians' network named after Irving Fisher, Michele Bullock recalled that Fisher believed good economics starts with good measurement, yet warned that facts alone are not enough and need to be paired with economic theory and sound judgement. In an uncertain geopolitical setting, policymakers need faster insight and more granular data, while AI creates both opportunities and new challenges.

2. The committee's role and work

For nearly thirty years the network has been a forum for statistical cooperation among central banks. Its mandate was updated in 2025 to cover data governance, technology and AI as well as official statistics, since central banks are both major producers of official figures and heavy users of data, facing shared questions about quality, privacy, security and responsible AI. Recent work covers microdata, data science and AI (including a membership poll on how far central banks have adopted AI), data governance, and closing climate-related data gaps.

3. A new strategy: data for the future

A three-year strategy sets three priorities. First, modernise central bank statistics by combining traditional methods with new sources, strengthening rather than replacing official figures. Second, AI and data innovation, the top priority in the member survey, with emphasis on practical, replicable use cases. Third, data governance, so that data can be trusted and AI used with guardrails. The Central Bank Data Collaboration Group now sits under the committee, and members are invited to join small working groups.

4. Conference themes

The programme follows three themes: AI and advanced analytics; novel, granular data such as payments, firm-level, market and satellite information; and trust in data that is reliable and fit for purpose. She closed with Fisher's point that policy without adequate facts risks avoidable mistakes.

1. A run of supply shocks

At a Sydney fundraising lunch for a youth mental health charity, her third as Governor, the head of the Reserve Bank of Australia described recent years as a succession of disruptions on the supply side: the pandemic, the energy surge after Russia invaded Ukraine, and now the Middle East conflict, extreme weather and trade disputes. She compared this period with the oil crises of the 1970s and argued that today's economy absorbs such shocks better, largely because credible inflation targets keep expectations steady. Shocks still cut growth and real incomes, so the bank's task is to stop them from turning into lasting inflation. Because price and capacity pressures were already elevated, the bank raised rates earlier in the year.

2. Where inflation stands

After the post-pandemic surge, Australian inflation fell markedly in 2024 and 2025 and looked set to return to target. It then climbed again, above target even before oil prices jumped. Headline inflation reached 4% in May, and the underlying measure, while following the bank's May forecast, remains too high. This reflects demand pressing on capacity and some pass-through of fuel costs, for example into the price of new homes, and firms report rising non-wage costs they intend to pass on. A recent survey showed inflation is the top economic worry of Australians.

3. How the economy is adjusting

Five months into the conflict, its full effect is still unclear and commodity prices remain volatile, while earlier rate rises have not yet fully worked through. Demand is slowing broadly as planned. Household spending has held up better than very weak confidence suggests, helped by a temporary cut in fuel tax, and saving rates are steady. Business confidence fell at the outbreak but has partly recovered, and investment has been stronger than expected thanks to data centres. Housing has cooled more than forecast, with price falls concentrated in Sydney and Melbourne, though prices are near their level of February; fewer than 1% of borrowers owe more than their home is worth, and few face serious repayment difficulty. The bank does not target house prices, only their effect on spending and inflation. Unemployment has risen a little more than expected and some firms paused hiring, but job advertisements stay firm; some further loosening of the labour market is still needed.

4. From calm to turbulence

From the late 1980s to the 2008 crisis, the so-called Great Moderation brought steadier growth and inflation. Better frameworks helped, such as floating exchange rates, labour reforms and inflation targets, but so did luck: fewer commodity and productivity shocks and the integration of China, which lowered costs worldwide. Monetary policy could then focus on demand, and price stability and full employment rarely conflicted. Since the pandemic, repeated adverse supply shocks have lifted prices and held back growth together. For Australia they mean a loss of real income, on top of years of weak productivity. Business investment, including in artificial intelligence, is key to lifting capacity, though its effects are uncertain. When supply grows slowly, any level of demand produces more inflation, sharpening the trade-off between the bank's two goals.

5. Lessons from the 1970s

In 1973 and 1979 oil prices rose two- to threefold. The bigger damage came afterwards, as firms passed on costs, workers sought compensating wage rises and inflation spread and persisted. Early policy tried to protect activity, expectations became entrenched, and only harsh tightening and deep recessions brought inflation down. In Australia inflation reached 12.5% in 1982 and unemployment climbed from about 6% to 10.5% in 1983. Today the economy uses far less oil per unit of output, inflation targets anchor expectations and flexible supply chains adapt faster, so a single shock is less likely to cause lasting high inflation and unemployment; several overlapping shocks are harder to handle.

6. Policy outlook

The bank's aims are unchanged. Even if the oil disruption fades, fuel costs will keep spreading to other prices, and domestic pressures were already too strong. Some further slowing in demand growth is likely needed, and the open question is whether this year's tightening is enough. Monetary policy cannot fix slow productivity, which limits non-inflationary growth and real wage gains. The board stands ready to raise rates again if required.

1. Inflation and the cash rate

Addressing a Senate committee on budget estimates, RBA Governor Michele Bullock explained that inflation fell into the target range in early 2025, prompting rate cuts, but accelerated markedly after mid-2025 as strong output growth added to capacity pressure, so it was too high even before the Middle East conflict. The conflict has driven up oil and commodity prices, lifting fuel prices and showing tentative signs of pass-through, including to new dwelling costs, with likely second-round effects. The Board has lifted the cash rate three times this year, 75 points in all, which takes one to two years to work fully but is already easing the housing market, and which helps contain domestic pressures and second-round effects even though it cannot reverse the oil-driven increase already in train.

2. Outlook and payments

She recognised the strain on households but warned that persistent inflation would become embedded in price and wage setting, require higher rates for longer, and hurt lower incomes most. May forecasts see headline inflation peaking above 4.5% in the June quarter, underlying inflation above target until mid-2027, slower growth and a rising but still low unemployment rate, with two adverse scenarios for a longer conflict. Investment in software, data centres and renewables is a bright spot. On payments, card surcharging should end from 1 October, interchange caps are being lowered and cost transparency improved, and Project Acacia found growing interest in tokenisation to improve wholesale markets, with further initiatives being planned.