Key Highlights

  • Bullock said “Will it be enough? I don’t know” after the cash rate target rose 25 basis points to 4.60% on 29 September 2026.
  • She declined to give forward guidance, but said the Board will increase rates again if that is what is needed to bring inflation down.
  • Headline CPI was 4.0% over the year to August, and the next cash rate decision is scheduled for 2.30 pm on 3 November 2026.

Reserve Bank Governor Michele Bullock offered no promise that September's rate rise would be the last, saying plainly that she could not know whether a 4.60% cash rate would be enough to bring inflation back to target.

Central bank governors usually choose their words with great care, and media conferences after a rate decision tend to be exercises in measured, conditional language. When Michele Bullock faced reporters on 29 September 2026, after the Monetary Policy Board lifted the cash rate target by 25 basis points to 4.60%, one short exchange cut through.

"Will it be enough? I don't know," the Governor said.

The line neatly captured the state of play at the Reserve Bank of Australia (RBA). The September rise, effective 30 September, was the fourth increase of 2026 and took the cash rate up from 4.35%. The decision was unanimous. Yet the Governor was frank that the outcome depends on how the economy responds over coming months, not on any predetermined plan.

Why the Governor refused to commit

Bullock paired her admission with a clear statement about what she would not do: "I'm not going to give you forward guidance."

She did, however, set out the condition under which the Board would act again: "The Board will increase interest rates again if that's what's needed to get inflation down."

That position matches the official record. The Board's post-meeting statement said: "The Board will continue to do what it considers necessary to bring inflation sustainably back to target". The minutes of the 28–29 September meeting, published on 13 October, record that the Board's strategy is to return inflation to target "in a timely manner" and that it will consider "increasing the cash rate target further if required."

Taken together, the message is conditional rather than directional. The Board has not signalled another move, nor has it ruled one out.

The uncertainty behind the candour

Several forces help explain why the Governor declined to declare the job done.

The first is the gap between current inflation and the target. Headline CPI was 4.0% over the year to August 2026, according to the monthly CPI. Underlying inflation, measured by the trimmed mean, was 3.6% over the year to the June quarter of 2026. Bullock described underlying inflation as running at "about 3.5 per cent for the past six months", which she said is "a percentage point above our target". The RBA targets inflation of 2–3%, aiming for the 2.5% midpoint.

She also offered a quarterly yardstick: inflation of about 0.6% a quarter is consistent with roughly 2.5% a year, compared with recent readings of 0.8 and 1.

The second is the time it takes for monetary policy to work. Bullock said the full effect of interest rate changes takes 12 to 18 months. Assistant Governor (Financial Markets) Christopher Kent made a similar point in an August fireside chat: "It takes some time for tighter monetary policy to have its full effect on economic activity and inflation." With three rises delivered between February and May and a fourth in September, much of 2026's tightening has not yet had its full effect.

The third is the external environment. The Board's statement noted that "some of the upside risks flagged in August are materialising." In paraphrase, those risks included a broader Middle East conflict, higher global energy prices and AI-related demand pushing up the prices of technology goods. Bullock warned that "Disruptions to oil supply could last longer than anticipated". The minutes note that domestic petrol and diesel prices in August were 13% higher than forecast.

What the Board weighed

The minutes show the Board considered two options: a 25 basis point increase or leaving the cash rate unchanged. Bullock confirmed the Board "considered holding and 25 basis points."

Arguments for holding centred on downside risks to economic activity, which members judged to be modest. In the end, "all members judged that it was appropriate to increase the cash rate target by 25 basis points".

Members also argued that the previous 4.35% cash rate might have been less restrictive than it was two years earlier, if the neutral rate had risen. The minutes describe financial conditions as having "remained somewhat restrictive", while noting the extent is uncertain. That uncertainty about how tight policy really is feeds directly into the Governor's reluctance to say whether 4.60% will suffice.

The minutes also record that developments "pointed to an increase in the risk of persistently elevated inflation." Bullock located the source of the problem at home: "Inflation is too high and has been driven by domestic capacity pressures." Staff judged that the underlying inflation surprise more likely reflected domestic capacity pressures than the pass-through of Middle East-related costs.

Reading the admission in context

The Governor's candour should not be mistaken for gloom about the economy. On the question of recession, she said: "That is not our central base case at this moment." She noted that the unemployment rate had risen to 4.6% but was "still quite low historically", adding that "we still think the labour market is a little bit tight."

Nor did she play down the cost of the decision. "Now, I know this decision is difficult for households with a mortgage and businesses with loans," she said.

Her stated goal is a return to 2.5% inflation, a level at which "people are not worrying about it". She also described a broader objective: to "stop expectations for high inflation from becoming embedded in price-setting decisions across the economy".

Financial markets, for their part, were already looking further ahead. According to the minutes, market pricing at the time of the meeting implied an increase in September, about 15 basis points more by year-end and a further 30 basis points in the first half of 2027. Those were market expectations, not RBA forecasts, and the Governor declined to endorse any path.

The bottom line

Bullock's "I don't know" was a statement of uncertainty about how the RBA is approaching policy: one meeting at a time, guided by incoming data, with the effects of earlier rises still working through the economy. The next cash rate decision is scheduled for 2.30 pm on 3 November 2026, and the next CPI release, covering September data, is scheduled for 28 October. Until then, the Board's stated position is that it will tighten further if inflation requires it, and that it has made no commitment either way.