RBA Governor Bullock Signals Tightening as Markets Price In September Rate Hike

Reserve Bank of Australia Governor Michele Bullock reiterated a hawkish policy stance, warning that upside inflation risks are materializing from external Middle East tensions, domestic demand, and supply shocks. Financial markets are pricing in roughly a 95% probability of a 25 basis point rate increase from the current 4.35% cash rate at the RBA's late September policy meeting, offering support to the Australian dollar. The remarks follow the RBA's decision to hold rates at 4.35% in August, as central bank projections show inflation is not expected to return to the midpoint of the 2% to 3% target until early 2028.