Bullock Speech: RBA Governor Outlines Policy Outlook After Raising Interest Rates

The Reserve Bank of Australia (RBA) has taken a bold step to tackle persistent inflation. On February 3, 2026, RBA Governor Michele Bullock announced a 25-basis-point increase in the Official Cash Rate (OCR), bringing it to 3.85%—the first hike in over two years.

Speaking at a press conference in Sydney, Bullock explained the rationale behind the move and provided insights into the RBA’s strategy for controlling inflation while supporting growth in a challenging economic environment.

Why the RBA Raised Rates

Inflation has remained stubbornly high, driven by strong domestic demand, wage pressures, and rising costs for housing and food. Bullock emphasized that while borrowing costs are tough on households, the rate hike was necessary to ensure price stability.

“Inflation remains too strong. Our priority is to ensure it returns sustainably to target,” Bullock said, highlighting the bank’s commitment to long-term economic stability.

The decision comes after months of inflation readings consistently above the RBA’s 2–3% target range. Economists note that the trimmed-mean inflation measure, which reflects underlying trends, continues to show upward pressure.

The Economic Outlook

Bullock painted a picture of an economy with both strength and challenges:

Low unemployment is supporting consumer confidence and spending.

Household demand remains robust, despite rising loan costs.

Private sector growth continues, particularly in services and housing.

However, these positive trends contribute to ongoing inflation. Higher wages and strong spending power mean prices are unlikely to cool quickly.

“We are mindful that inflation above target undermines confidence in the economy. Our actions are carefully calibrated to prevent it from becoming entrenched,” Bullock explained.

The RBA expects a gradual return of inflation to the target range, with potential further rate increases to around 4.2% by year-end, depending on economic data.

Impact on Households and Markets

Higher interest rates affect everyone—from homeowners to investors. Mortgage repayments will rise, putting pressure on households already dealing with higher living costs.

Financial markets reacted swiftly. The Australian dollar strengthened, reflecting investor confidence in a hawkish RBA, while equities saw some volatility as market participants recalibrated growth expectations under tighter monetary conditions.

Bullock acknowledged the short-term challenges but emphasized the long-term goal:

“It’s tough on households now, but unchecked inflation would hit even harder in the future.”

Balancing Inflation and Employment

One of the key themes in Bullock’s speech was the RBA’s dual focus: controlling inflation while supporting employment.

A strong labour market is generally positive, but it can also increase wage and price pressures. The RBA’s goal is to navigate a careful path, avoiding unnecessary disruption to employment while bringing inflation back to target.

“Our dual mandate requires judgement and flexibility. We will adjust policy as more data becomes available, keeping an eye on both inflation and labour market conditions,” Bullock said.

Looking Ahead: Risks and Uncertainty

Bullock warned that the economic landscape remains uncertain. Global market fluctuations, supply chain challenges, and unexpected price shocks could affect inflation and growth.

While no immediate crisis is expected, the RBA remains vigilant. Further rate hikes could be necessary if inflation persists, while future easing may only occur once price pressures are clearly under control.

“Monetary policy must remain responsive to the evolving economy. Achieving price stability is our paramount concern,” Bullock added.

Takeaways for Australians

Prepare for higher mortgage payments and borrowing costs.

Consumer prices may remain high for some time.

The RBA is committed to stabilizing inflation without derailing employment growth.

Markets are adjusting, with the Australian dollar strengthening and equities experiencing short-term fluctuations.

For Australians, the message is clear: the central bank is acting decisively to protect long-term economic stability, even if it means short-term challenges.

Conclusion

Governor Bullock’s speech signals a carefully measured approach by the RBA. The bank is taking action to combat inflation while monitoring employment, spending, and broader economic trends.

The coming months will test both households and markets as higher rates take effect, but the RBA remains committed to its mandate: price stability and sustainable economic growth.

“We will continue to act decisively, but with caution, ensuring that the economy remains resilient as inflation returns to target,” Bullock concluded.