Bullock Speech: RBA Governor discusses on policy outlook after the expected interest rate hike
|Reserve Bank of Australia (RBA) Governor Michele Bullock is addressing the press conference, explaining the reasons behind raising the benchmark interest rate by 25 basis points (bps) to 4.10% after the March monetary policy meeting.
Bullock is responding to media questions as part of a new reporting format for the central bank that began last year.
Key quotes from the RBA press conference
Higher petrol prices not reason for today's rate rise.
Risks to inflation to the upside.
Cash rate was not high enough to bring inflation back to target.
Had a very robust meeting.
Considered whether to hold off until May.
Discussion was about timing not direction of policy.
All members agreed inflation was too high.
Difference was in timing, those voting against still felt need for an eventual rate rise.
Middle East uncertainty was a big thing in discussion.
Issue was not direction, but timing.
Risks more on upside for inflation than downside for employment.
Do not want to see recession or large rise in unemployment.
Understand this is tough news for people with mortgages.
If we don't bring excess demand down, business will build that into costs and prices.
Board alert to risks from Middle East, if have to change track we will.
Split decision shows board actively debates and challenges.
Today's hike does not say anything about forward path.
Forward path for rates is uncertain.
Markets misinterpreted deputy governor, he was not signalling a hike.
Higher A$ is helpful in bringing down inflation.
Do not need to create a negative output gap to bring inflation down.
Mid East war heightened our concerns about inflation.
Rates are in the middle of the range of neutral.
Not certain how restrictive financial conditions are.
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 hiked the Official Cash Rate (OCR) by 25 basis points (bps) to 4.10% from 3.85% after concluding its March monetary policy meeting.
The decision aligned with the market expectations.
Summary of the RBA Monetary Policy Statement
Today's decision was made by majority.
While inflation has fallen substantially since its peak in 2022, it picked up materially in the second half of 2025.
Information since the February meeting suggests that some of the increase in inflation reflects greater capacity pressures.
Five members voted to increase rate by 25bps.
The conflict in the Middle East has resulted in sharply higher fuel prices, which, if sustained, will add to inflation.
The board judged that there is a material risk that inflation will remain above target for longer than previously anticipated.
Four members voted to leave the cash rate target unchanged at 3.85 per cent.
Short-term measures of inflation expectations have already risen.
Board judged that inflation is likely to remain above target for some time and that the risks have tilted further to the upside.
A wide range of data over recent months have confirmed that inflationary pressures picked up materially in the second half of 2025.
The conflict in the Middle East poses substantial risks in both directions.
Developments in the Middle East remain highly uncertain, but under a wide range of possible scenarios could add to global and domestic inflation.
Financial conditions have tightened a little this year, but the extent to which monetary policy is restrictive is uncertain.
AUD/USD reaction to the RBA interest rate decision
The Australian Dollar meets fresh supply in an immediate reaction to the RBA’s decision. The AUD/USD pair drops back to test 0.7050, as of writing, down 0.17% on the day.
Australian Dollar Price This week
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies this week. Australian Dollar was the weakest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.64% | -0.52% | -0.19% | -0.30% | -1.15% | -0.82% | -0.25% | |
| EUR | 0.64% | 0.14% | 0.37% | 0.33% | -0.51% | -0.19% | 0.38% | |
| GBP | 0.52% | -0.14% | 0.36% | 0.19% | -0.63% | -0.32% | 0.31% | |
| JPY | 0.19% | -0.37% | -0.36% | -0.07% | -0.94% | -0.59% | -0.03% | |
| CAD | 0.30% | -0.33% | -0.19% | 0.07% | -0.89% | -0.51% | 0.06% | |
| AUD | 1.15% | 0.51% | 0.63% | 0.94% | 0.89% | 0.32% | 0.90% | |
| NZD | 0.82% | 0.19% | 0.32% | 0.59% | 0.51% | -0.32% | 0.54% | |
| CHF | 0.25% | -0.38% | -0.31% | 0.03% | -0.06% | -0.90% | -0.54% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
This section below was published at 00:30 GMT as a preview of the Reserve Bank of Australia's monetary policy announcements.
- The Reserve Bank of Australia is expected to deliver another 25 bps hike, lifting the interest rate to 4.10% in March.
- Eyes on RBA Governor Bullock’s press conference for cues on the monetary policy path outlook.
- The Australian Dollar is poised for a big reaction to the RBA policy announcements.
The Reserve Bank of Australia (RBA) is set to deliver another 25 basis points (bps) interest rate hike following its March monetary policy meeting on Tuesday, lifting the Official Cash Rate (OCR) to 4.10% from 3.85%.
The decision will be announced on Tuesday at 03:30 GMT, accompanied by the Monetary Policy Statement (MPS). RBA Governor Michele Bullock’s press conference will follow at 04:30 GMT.
The Australian Dollar (AUD) is primed for intense volatility in reaction to the RBA policy announcement and Bullock’s presser.
RBA rate hike is a done deal amid energy-driven inflation risks
As the war in the Middle East continues, central banks globally face a tough call over whether to look through the energy-driven inflation shock or push back against it and risk derailing the economic recovery.
However, the RBA seems well-positioned to counter looming inflation risks by raising the OCR as the economy remains on a solid footing.
Data from the Australian Bureau of Statistics (ABS) showed the Gross Domestic Product (GDP) rose 0.8% in the fourth quarter of 2025, above an upwardly revised 0.5% in the previous quarter and the market consensus of 0.6%. Annual growth accelerated to 2.6%, the fastest pace since early 2023.
Meanwhile, the monthly Consumer Price Index (CPI) rose 0.4% in January, beating estimates of a 0.3% increase. Moreover, the annual inflation reading held at a firm 3.8%, above forecasts for a deceleration to 3.7%.
During a speech at the AFR Business Summit in Sydney on March 2, Governor Michele Bullock said that the Board was uncertain if financial conditions were sufficiently restrictive to return inflation to the midpoint of the target in a reasonable timeframe, highlighting that developments in the Middle East serve as a reminder of persistent geopolitical uncertainty, and warning that a prolonged shock could add to inflation pressures
Last week, RBA Deputy Governor Andrew Hauser warned that Oil price shocks pose upside risks to inflation amid uncertainty tied to the Iran conflict.
“Volatility in Oil prices and tensions in the Middle East pose a genuine challenge for us [the central bank].” However, “The Australian economy in many ways is in good shape,” he said.
Against this backdrop, ANZ, Westpac, Deutsche, Citi and the National Australia Bank (NAB) revised their call, projecting a rate hike this week.
How will the Reserve Bank of Australia’s decision impact AUD/USD?
The AUD is finding its feet against the US Dollar (USD) as it braces for the RBA showdown.
AUD/USD could stage a solid recovery if the RBA’s MPS and Governor Bullock’s words suggest that rate hikes are here to stay.
On the other hand, the Aussie pair could continue to face bearish pressure if Bullock warrants caution on future rate hikes and delivers a wait-and-see guidance.
Dhwani Mehta, Asian Session Lead Analyst at FXStreet, highlights key technical levels for trading AUD/USD following the policy announcement.
“The major has slipped under the 21-day Simple Moving Average (SMA) near 0.7070, signaling a loss of short-term upside momentum. The 14-day Relative Strength Index (RSI) has retreated toward the mid-40s, indicating fading bullish pressure and reinforcing the corrective tone after the pair failed to sustain gains above 0.7100.”
“Immediate resistance emerges at the 21-day SMA around 0.7070, followed by the 0.7120 area, which limited the pair in February, acting as the next barrier, and 0.7150 capping the topside beyond there. On the downside, initial support is at 0.6980, which supported the sharp decline on Friday, guarding a deeper pullback toward 0.6960, where the 50-day SMA currently rises. A break below that zone would expose the 100-day SMA around 0.6770,” Dhwani adds.
Interest rates FAQs
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.
Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.
Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.
The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
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