Will 4.60% Be Enough? The Test Bullock Set for the RBA's Tightening Cycle

Aditi Sarkar

29 October 2026 09:03 PM AEDT

Will 4.60% Be Enough? The Test Bullock Set for the RBA's Tightening Cycle

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Highlights

Governor Bullock appeared before the Senate Economics Legislation Committee on 28 October 2026 to account for RBA decisions.
Inflation peaked at 7.9% at the end of 2022, returned within the 2-3% target during 2024-25, and is now above target again.
Business investment rose more than 10% over the year despite four interest rate increases totalling 100 basis points in 2026.
Housing prices have fallen in most capital cities yet remain about 50% above early-2020 levels.

Governor Michele Bullock appeared before the Senate Economics Legislation Committee on 28 October 2026, delivering an opening statement that set out the RBA's current assessment and the question hanging over the tightening cycle: whether a cash rate of 4.60% will be sufficient to return inflation to the midpoint of the 2-3% target range.

Inflation's Journey and Current Position

Inflation peaked at 7.9% at the end of 2022 before falling back within the 2-3% target range during 2024 and 2025. It has since risen above the target range again, with headline CPI running at 4.3% in the September 2026 monthly measure and underlying inflation near 3.5% for around six months according to Bullock's 29 September media conference. The Board aims to return inflation to the midpoint of the target range, which Bullock confirmed at the Senate hearing.

Business Investment Defying Rate Pressure

One factor complicating the inflation picture is the strength of business investment. The minutes of the Board's 29 September meeting recorded that business investment was up more than 10% over the year, driven primarily by data centres and renewable energy. Strong investment adds to demand in the economy at a time when the Board is trying to slow overall spending to bring inflation down.

Housing: Falling Prices, Still Elevated Levels

Bullock told senators that housing prices have fallen in most capital cities, with new housing loans also declining. These are signs that tighter monetary policy is working through the housing market. However, she also noted that prices remain about 50% above early-2020 levels. The Board has been explicit that monetary policy does not target housing prices.

FLAG: Bullock said at the Senate hearing that inflation was projected to return to the target midpoint by late 2027. The August 2026 Statement on Monetary Policy In Brief summary states early 2028. Both are in the source document; readers should note the discrepancy and await the 3 November Statement on Monetary Policy for the updated forecast.

FAQs

Q: What did Bullock say the RBA's inflation goal is?

A: Bullock told the Senate that the Board aims to return inflation to the midpoint of the 2-3% target range, with some flexibility on timing to balance the full employment objective.

Q: What is the current business investment trend despite rate rises?

A: Business investment rose more than 10% over the year to September 2026, led by data centres and renewable energy, despite four 25 basis point rate increases.

Q: Have housing prices fallen across Australia?

A: Bullock said prices have fallen in most capital cities. They still remain approximately 50% above early-2020 levels.

Q: When did Australian inflation last fall within the 2-3% target range?

A: Inflation was within the target range for a period in 2024 and 2025 before rising above the target range again in the second half of 2025.

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