Michele Bullock: Listening to Australians, interpreting the data and setting monetary policy
Speech by Ms Michele Bullock, Governor of the Reserve Bank of Australia, at the Australian Financial Review Business Summit, Sydney, 3 March 2026.
The views expressed in this speech are those of the speaker and not the view of the BIS.
I would like to begin by acknowledging the Traditional Custodians of the land on which we meet and pay my respects to Elders past and present. I extend that respect to all Aboriginal and Torres Strait Islander people joining us today.
Thank you for having me today. This is an important opportunity to reflect on the forces shaping the Australian economy, how these forces are shifting, and how the Monetary Policy Board is responding.
Since the middle of last year, inflationary pressures have picked up, partly because capacity pressures have been stronger than we previously assessed. With underlying inflation now expected to enter the 2–3 per cent range in mid-2027 and the labour market still somewhat tight, the Board was unanimous in its decision to raise the cash rate in February.
Today I will set out why the Board judged a rate rise to be necessary in February, how it supports our monetary policy strategy, and how we make decisions even when uncertainty is elevated. I also want to explain why listening directly to Australian households and businesses is an essential input to our decision-making.
Inflation is too high and monetary policy needed to respond
In the statement following its decision in February, and in the subsequent minutes of the meeting, the Board noted that inflation is too high and that some of the recent increase in inflation is likely to persist (Graph 1). Staff forecasts did not see inflation coming back into the target band until mid-2027 – that is over a year away. The staff's view is that the CPI data for January, which was released after the February meeting, broadly supports this assessment. Headline inflation was 3.8 per cent in the year to January and it will continue to be boosted for a time by the unwinding of electricity rebates. But measures of underlying inflation, which strip out some of the large temporary price moves, are also above the top end of our 2–3 per cent target band.