What’s next for interest rates? Even RBA governor Michele Bullock admits she doesn’t know

RBA governor Michele Bullock says there are some people who seem convinced they know exactly what to do – but ‘it’s not as easy as that’.RBA governor Michele Bullock says there are some people who seem convinced they know exactly what to do – but ‘it’s not as easy as that’.It seems everybody wants to know what the Reserve Bank is going to do with interest rates, not least politicians and the Canberra press gallery itching for a federal election.

Nuance doesn’t sell media subscriptions, but analysts will find sufficient ambiguity in the RBA’s statement and Bullock’s comments to stay busy. That confidence was inspired by minor word changes that implied a more “hawkish” tilt. Exhibit A: “Recent data … reinforced the need to remain vigilant to upside risks to inflation,” the statement read.

Inflation figures for May land on 26 June, and a lot of attention will focus on whether there’s an uptick from the 3.6% rate recorded for both the March quarter and April alone. But the governor downplayed the partial nature of monthly figures, stating with some frustration that New Zealand was the “only other advanced economy I can think of” that relied on quarterly inflation figures to set interest rates.

Source: Loan Digest (loandigest.net)

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