Bullock says inflation won’t ‘take off again’ amid rate hike speculation
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The news: Governor of the Reserve Bank of Australia Michele Bullock said that inflation is not “taking off” after data released Wednesday saw annual inflation rise by 3.8% in the 12 months to January 2026.
The context: Speaking at a University of Melbourne dinner on Wednesday evening, Bullock said that despite the data, the RBA would not move quickly to make its next decision.
“Now we’re in a situation where the labour market, we think, is a little bit tight, inflation is a bit elevated, I don’t think it’s taking off again,” Bullock said. “We thought the economy was in balance, maybe it’s a little tighter than we thought.”
The governor explained that the economy is “a little bit more difficult” than in previous periods when it was raising rates. “It’s not like we’ve got a situation where it’s very clear what we have to do,” she said, adding that “people have to be patient.”
Bullock added that it can be difficult to know whether an economy is experiencing a labour market imbalance or whether there is excess demand “when you’re close.” When you’re a long way off from balance, it’s very obvious, she said, “but at the moment it’s not so obvious.”
While some economists like those at Commonwealth Bank were expecting the next rate hike to come in May ahead of the CPI release, traders were less confident about rapid rate rises after Wednesday’s data.
The figures from the Australian Bureau of Statistics show annual inflation was again predominantly driven by housing (+6.8%), followed by food and non-alcoholic beverages (+3.1%) and recreation and culture (+3.7%). The rising in housing costs reflects new dwelling price (+3.5%) and rent (+3.9%) increases as well as electricity cost increases as households continue to be impacted by the timing of subsidies.
According to the RBA’s February 2026 statement of monetary policy, the central bank is expecting consumer inflation to remain above the midpoint of the central bank’s target band until early 2027.
The sources: Bloomberg, The Guardian, RBA
