In opening testimony to the Senate Economics Legislation Committee, Reserve Bank of Australia Governor Michele Bullock said the Monetary Policy Board has raised the cash rate by 75 basis points this year to contain inflation, which accelerated in the second half of 2025 and remains too high. The Middle East conflict has added to oil and other commodity price pressures, lifting fuel costs and creating a risk of broader second-round price effects. Based on the Bank’s May forecasts, headline inflation is expected to peak at over 4.5 per cent in the June quarter, while underlying inflation is expected to remain above the target range until mid-2027. Bullock said data and developments since the May Statement on Monetary Policy have not been materially different from expectations, with a full update due in August. GDP growth is expected to slow this year as higher interest rates and the Middle East conflict weigh on activity, and the unemployment rate is expected to rise over the coming year or so while remaining below pre-pandemic levels. The Bank said tighter policy is intended to restrain domestic inflationary pressures and contain second-round effects from higher energy and commodity prices, and it will continue to assess incoming data and external developments. The testimony also highlighted payments work already announced. Following the card payments review, card surcharging on debit and credit cards is due to end from 1 October, interchange fee caps on debit and consumer credit cards are being lowered and transparency on payment costs is being improved. Bullock also pointed to Project Acacia, conducted with the Digital Finance Cooperative Research Centre, which found growing industry interest in using tokenisation to improve efficiency and reduce risk in wholesale markets, with follow-on initiatives now in planning.
Reserve Bank of Australia2026-06-04
Reserve Bank of Australia tells Senate committee cash rate has risen 75 basis points this year as inflation stays too high and card surcharging will end from 1 October
Reserve Bank of Australia Governor Michele Bullock told the Senate Economics Legislation Committee the Bank has raised the cash rate by 75 basis points this year to contain inflation, which is expected to peak above 4.5% in the June quarter and keep underlying inflation above target until mid-2027. She said tighter policy is expected to slow GDP growth, lift unemployment and restrain domestic inflationary pressures. Bullock also highlighted upcoming changes to card payments, including lower interchange fee caps and improved cost transparency, and noted Project Acacia’s findings on growing industry interest in tokenisation for wholesale markets.