A Central Bank Hawk Relaxes Her Guard. Not Before Time
A long-awaited rate cut heralds a new era for the Australian economy, however much the RBA may want to downplay it.
RBA Governor Michele Bullock must own this cycle.
Photographer: Brendon Thorne/BloombergMichele Bullock has been at the helm of the Reserve Bank of Australia for more than a year, but in an important way, her tenure begins now. The RBA's interest-rate cut on Tuesday, the first since 2020, has been a long time coming. She and her team will have to own this new approach, with its risks and rewards. For the moment, they are focusing on the former.
The quarter-point reduction, to 4.1%, seems a grudging one. Inflation is still public enemy number one. The bank emphasized the labor market’s strength and projected that the clip of consumer price gains won’t return to the middle of the bank’s target zone for another few years. Critically, officials were careful not to flag future decisions. Bullock has often deployed the phrase “not ruling anything in or out.” The language wasn’t included in the statement, but was there in spirit. Traders scaled back bets on further trims.