Bullock Speech: RBA Governor speaks on interest rate outlook after standing pat

Reserve Bank of Australia (RBA) Governor Michele Bullock is addressing the press conference following the November monetary policy announcement.

Bullock is taking questions from the press, as part of a new reporting format for the central bank that started this year.

Earlier this Tuesday, the RBA announced to leave the policy rate unchanged at a 12-year high of 4.35%. The central bank continued to remain non-committal on the next interest rate move.

Key quotes from the RBA press conference 

Believe rates need to stay restrictive for time being.

Think there are still risks on upside for inflation.

If economy turns down more than expected, will be ready to act.

Need to be convinced core inflation heading back into band.

Discussion today was similar to the September meeting.

The conversation was more centered around "what we needed to see to change our mind" on policy.

Current cash rate path priced by market is as good as any.

Risks are fairly balanced on inflation, policy.

We can't ignore risks from overseas developments but our main focus is on the domestic front.

 

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This section below was published at 03:30 GMT to cover the Reserve Bank of Australia's monetary policy announcements and the initial market reaction.

The Reserve Bank of Australia (RBA) announced on Tuesday that it kept the Official Cash Rate (OCR) on hold at 4.35% following the conclusion of its November policy meeting.

The decision came in line with the market expectations.

The RBA maintained its policy settings for the eighth meeting in a row, having hiked the benchmark rate by 25 basis points (bps) in November last year.

Summary of the RBA Monetary Policy Statement

Board will continue to rely upon the data and the evolving assessment of risks.

Underlying inflation remains too high.

Do not see inflation returning sustainably to the midpoint of the target until 2026.

Policy will need to be sufficiently restrictive until the board is confident that inflation is moving sustainably towards the target range.

While headline inflation has declined substantially and will remain lower for a time, underlying inflation is more indicative of inflation momentum, and it remains too high.

Board is not ruling anything in or out.

Growth in output has been weak.

Still exceeds supply, gap is narrowing.

Core inflation remains elevated, service inflation to decline only gradually.

Labour market still tight, demand for labor remains strong.

Household consumption has picked by less than expected, likely to be flat in Q3.

Policy in Australia not as restrictive as in most peers, even after recent rate cuts abroad.

RBA lowers forecasts for growth in GDP and household consumption, trims CPI and core inflation.

Sees trimmed mean inflation at 3.4% Dec, 3.0% June 2025, 2.8% Dec 2025, 2.5% Dec 2026.

Sees unemployment at 4.3% Dec, 4.5% Dec 2025, 4.5% Dec 2026.

Difficult to sustain wage gowth at current level withour pick up in productivity.

AUD/USD reaction to the RBA interest rate decision

The Australian Dollar fails to move on the RBA’s extended pause. The AUD/USD pair is adding 0.10% on the day to trade at 0.6590.

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This section below was published on November 4 at 21:45 GMT as a preview of the Reserve Bank of Australia (RBA) policy announcements.

• Australia’s benchmark interest rate is set to stay unchanged at 4.35% in November.
• The focus remains on Reserve Bank of Australia Governor Michele Bullock’s comments and updated economic forecasts.
• The Australian Dollar could wilt if RBA Governor Bullock ramps up bets for a December rate cut.

The Reserve Bank of Australia (RBA) is expected to sit tight yet again on its monetary policy, extending the pause into the eighth straight meeting on Tuesday.

The RBA is set to maintain the Official Cash Rate (OCR) at 4.35% after its November policy meeting. The decision will be announced at 03:30 GMT, followed by Governor Michele Bullock’s press conference at 04:30 GMT.

Reserve Bank of Australia to stand pat again

With a no-rate change decision fully priced in this month, the market’s attention will be on the RBA’s updated economic forecasts and Governor Michele Bullock’s press conference for fresh hints on the timings of the central bank’s first interest rate cut since its post-covid tightening cycle.

Sticky underlying inflation and tight labor market conditions continue to back the case for a cautious stance by the Australian central bank.

The RBA’s preferred inflation gauge, the annual Trimmed Mean Consumer Price Index (CPI), slowed to 3.5% from 4.0% in the third quarter but stayed above the Bank’s 2%-3% target. The service-sector inflation also remained elevated.

Additionally, the RBA’s annual report, published on October 25, reiterated that inflation would not be sustainable within the 2%-3% target for ‘another year or two’. 

Meanwhile, the Australian economy added 64,100 jobs in September, beating the estimated net gain of 25,000 jobs. Of the new jobs created in September, 51,600 were full-time roles. The Unemployment Rate stood unchanged at 4.1% in September, against the forecast of an increase to 4.2%.

These data points potentially rule out any policy change this week and for the rest of this year. Markets are currently pricing in less than 20% probability of a Christmas rate cut by 25 bps, according to BBH analysts. 

Previewing the RBA policy decision, analysts at TD Securities (TDS) said: “The RBA is unlikely to debate the case for hiking but we don't believe the forecasts to reveal the Bank is considering cuts over coming months either. For now, we stick to May 2025 as the first RBA cut.”

How will the RBA interest rate decision impact AUD/USD?

The Australian Dollar (AUD) is moving away from its lowest level in two months against the US Dollar (USD) in the lead-up to the RBA announcements. Will the central bank provide extra legs to the AUD/USD recovery?

The ongoing upswing could continue if the RBA repeats that “the Board is not ruling anything in or out,’ while acknowledging upside risks to inflation. Thus, the Bank’s prudent approach is expected to drive AUD/USD back toward 0.6700.

Conversely, the pair could witness a sharp sell-off toward 0.6500 in case RBA Governor Michele Bullock says in her post-meeting press conference that the Board discussed cutting rates as an option at the meeting.

Dhwani Mehta, Asian Session Lead Analyst at FXStreet, notes key technicals for trading AUD/USD on the policy outcome. “AUD/USD has come up for air, testing the 200-day Simple Moving Average (SMA) ahead of the RBA decision. The 14-day Relative Strength Index (RSI) rebounds sharply but remains below the 50 level, currently near 41, keeping sellers hopeful.” 

“Buyers need acceptance above the 200-day SMA at 0.6629 for a sustained recovery. The next topside barriers are seen at the 0.6700 threshold and the 50-day SMA at 0.6730. On the flip side, a renewed decline could test the two-month low of 0.6537, below which the 0.6500 level will offer some respite to buyers. Further south, the August 6 low of 0.6472 will come into play,” Dhwani adds.