Key Highlights

  • Governor Bullock said inflation will likely be higher than the RBA's base case in August, citing much higher global energy prices.
  • The statement also covered housing, payments reform, the Cash Distribution Framework Act 2026 and the Project Acacia report.
  • The statement gave no signal about the Board's decision, which is due on 3 November 2026.

Appearing by videoconference before the Senate Economics Legislation Committee on 28 October, Governor Michele Bullock laid out the Reserve Bank's thinking with the next Monetary Policy Board meeting only days away.

Timing gave Governor Michele Bullock's appearance at Supplementary Budget Estimates an added edge. Her opening statement to the Senate Economics Legislation Committee, delivered by videoconference on Wednesday 28 October 2026, came six days before the Reserve Bank of Australia (RBA) announces its next cash rate decision, and she noted that the Board meets "next week".

That proximity shapes how such statements are read. A Governor appearing shortly before a meeting typically avoids anything that could be taken as a signal of the outcome, and Bullock's statement was no exception. It did, however, give senators, and the public, a detailed account of how the Bank sees the economy and what it is weighing.

A recap for the committee

The Governor began by updating senators on what had happened since her previous appearance in June. Since that hearing, the Board had raised the cash rate target by 25 basis points, bringing the cumulative increase this year to 100 basis points. The cash rate target now sits at 4.60 per cent, effective 30 September 2026.

She restated the Board's objective: to return inflation to the 2–3 per cent target range, with the midpoint as the reference point. She also noted the Board has some flexibility on timing, so that it can balance that goal against its mandate for full employment.

To give context, she traced the recent history. Headline inflation peaked at 7.9 per cent at the end of 2022. It was within the target range for a period in 2024 and 2025, picked up in the second half of 2025, and has been above target since. "Recently, inflation has been around 3½ to 4 per cent in year-ended terms," she said.

The key admissions

Several passages stood out for their directness about the inflation outlook:

  • On sources of inflation: "we still see inflation arising from domestic capacity pressures."
  • On energy: "global energy prices are now much higher than had been assumed in the August forecasts".
  • On the forecasts themselves: "Inflation will therefore likely be higher than was our base case in August."

The August Statement on Monetary Policy had projected inflation returning to the midpoint only in late 2027, with the risks skewed to the upside. The Governor's acknowledgement that inflation is likely to exceed that base case is significant, because new forecasts will be published alongside the 3 November decision.

She also listed the global cost pressures at work: those linked to the Middle East conflict, AI-related demand and extreme weather. She noted that the Middle East conflict has re-escalated, that short-term inflation expectations are elevated, and that the full effects of recent rate rises have yet to be felt.

Jobs, housing, payments and cash

The statement went well beyond prices. On activity, Bullock told the committee that household spending growth is moderating only gradually, while business investment has picked up, mainly in data centres and renewable energy.

On jobs, she referred to "the unemployment rate recently rising a little more than we had expected". Even so, the Bank's judgement is that the labour market appears slightly tighter than previously thought, and the share of the population with a job remains high. Low productivity growth, she said, means the economy cannot grow rapidly without adding to inflation pressure.

On housing, she observed that prices have fallen in most capital cities and new housing loans have declined, though prices remain around 50 per cent higher than in early 2020. She emphasised that "monetary policy does not target housing prices." Household financial stability risks, she said, are contained, with only a small share of borrowers in negative equity or in severe repayment difficulty.

The statement also covered payments reform. The Payments System Board concluded that removing card surcharging, reducing interchange fee caps and improving transparency was in the public interest. "Card surcharging was removed from 1 October," she said, adding that several large providers have cut card processing fees for small businesses and that competition is showing signs of increasing.

She outlined next steps in the broader Review of Payments System Regulation, which released an Issues Paper in June. Stakeholders raised mobile wallets, three-party card schemes, account-to-account payments and agentic commerce. "We intend to release regulatory priorities by the end of 2026," she said, with further consultation on prioritised issues by mid-2027.

On cash, she told senators the Cash Distribution Framework Act 2026 has passed, and that Linfox Armaguard Pty Ltd has been designated. "Designation does not mean that the RBA will exercise crisis-readiness or resolution powers," she noted. "Cash remains a critical part of an inclusive and resilient payments system."

She also referred to the Project Acacia Final Report, released in May, which found tokenisation has potential to improve wholesale market efficiency, and to the RBA's consultation on how its settlement services could support tokenised markets.

What the statement did not say

Notably absent was any hint of what the Board will decide. That is consistent with the Governor's approach at the 29 September media conference, when she said: "I'm not going to give you forward guidance." The Board's last statement said it remains prepared to respond, "including increasing the cash rate target further if needed", and that it "will be attentive to the data and the evolving assessment of the outlook and risks".

Her closing message on inflation was framed in terms of its impact on people: "High inflation hurts everyone." And, by way of explaining the Bank's resolve: "But we can't allow high inflation to persist."

The bottom line

The Senate appearance offered a clear statement of the RBA's concerns: inflation running above target, energy prices well above earlier assumptions, and a forecast now likely to be revised up from August. It also acknowledged a softening housing market and a labour market where unemployment has risen a little faster than expected.

What the Board makes of all this will become clear at 2.30 pm (AEDT) on 3 November, when the decision and the new Statement on Monetary Policy are released, followed by a media conference at 3.30 pm. Until then, the outcome remains undecided, and it is worth reading the Governor's words as a description of the Bank's assessment rather than a preview of its decision.