The parliamentary appearance capped a fortnight of hawkish communication from the RBA's senior team, including deputy governor Andrew Hauser on the ABC's 7.30 program and chief economist Sarah Hunter at two conferences. The barrage of signals has shifted market expectations sharply.
"September now seems all but a lock," wrote RBC head of economics and rates strategy Robert Thompson in a note. "The barrage of recent RBA communication has left us with little doubt that bank insiders have already made up their minds — a hike in September is the necessary course of action." Thompson, who previously expected a November rise, now sees a peak cash rate of 4.85%.
Governor Bullock warned that inflation in Australia was "too high" and that risks officials had previously flagged as triggers for another rate rise have materialised, according to Financial Review reporting. Former RBA assistant governor and Westpac chief economist Luci Ellis told ABC News yesterday that "the internal members of the board are making noises that they want to go."
Capital Economics' Marcel Thieliant agreed a September hike "now looks like a done deal" but argued it would be the last, saying "monetary policy is already quite restrictive and we think the bank will be wary of causing a sharp rise in the unemployment rate."
Deputy governor Hauser backed a view from US economist Kenneth Rogoff that the era of ultra-low interest rates was an anomaly. "Interest rates were never going to be zero or near zero for a long while," he observed, adding that real long-term rates may now be closer to a "more sensible" level.
Markets also price a 37% chance of a follow-up hike in November, according to LSEG data. If the September rise is confirmed, it would be the fourth increase this year.