RBA Bullock: Q2 core inflation may not have slowed as much as first expected

RBA Bullock: Q2 core inflation may not have slowed as much as first expected

• Reserve Bank of Australia Governor Bullock

Reserve Bank of Australia Governor Bullock

• RBA Governor Bullock says a measured, gradual approach to monetary policy easing is appropriate.
• She notes the labour market has eased only gradually, with the unemployment rate still relatively low.
• The rise in unemployment in June was in line with forecasts and not considered a shock.
• June data suggests the labour market has moved a little further toward balance.
• Leading indicators are not pointing to a significant near-term increase in unemployment.
• Other labour market measures, such as the vacancy rate, have remained stable.
• Labour market rebalancing is occurring through vacancies, hours worked, and voluntary job switching.
• The RBA is not targeting a specific unemployment rate or job losses.
• Bullock says Q2 core inflation may not have slowed as much as initially expected.
• The RBA needs further data to support its forecast that core inflation will ease toward 2.5%.
• Maintaining low and stable inflation remains a key objective.
• There is still uncertainty and unpredictability in the global economy.
• However, the likelihood of a severe downside trade war scenario now appears to have diminished.

RBA Governor Bullock’s comments reinforced expectations for a cautious and gradual policy easing path. The acknowledgement that June’s rise in unemployment was anticipated and that leading indicators remain stable suggests the RBA is in no rush to cut rates aggressively.

Sticky core inflation and the need for further data before confirming a disinflationary trend could temper market hopes for near-term rate cuts.

The relatively measured tone, combined with signs of labour market resilience, may support the Australian dollar in the short term while keeping front-end yields steady. Diminished trade war risks could also help risk sentiment more broadly.