Reserve Bank of Australia Governor Michelle Bullock made some bold statements on inflation and monetary policy on Wednesday.
Bullock stated in her speech that if inflation in Australia remains higher than expected, the Reserve Bank of Australia will respond through its monetary policy. She also expressed her belief that the Reserve Bank’s policy is walking a tightrope, but the bank is on high alert to the risks of rising inflation.
Bullock also expressed concern about the inflationary impact of supply shocks, noting that the full effects of previous interest rate increases on consumption have not yet been fully felt by the Australian economy. In addition, it highlighted the slowdown in demand and decline in per capita consumption.
It is worth noting that the results of the Reserve Bank of Australia’s monetary policy meeting in October indicated the potential need for further tightening if inflation continues to exceed expectations. Committee members acknowledged that upward risks to inflation constitute a major source of concern.