Bullock cited higher-than-expected September quarter inflation figures during the hearing. This includes persistent services inflation due to rising costs such as electricity, rents, wages, and a 7.2% fuel cost jump. Rents saw the biggest annual rise in over a decade.
In response to these developments, economists at Commonwealth Bank and ANZ, who initially expected steady rates, now project a 0.25 percentage point hike in the cash rate to 4.35%. The financial markets have also adjusted their rate hike probability from 20% to 55%.
Despite concerns over rising price pressures, Bullock minimized these fears and endorsed the Albanese government’s budget strategy against inflation. She warned of potential cash rate hikes if the inflation outlook worsens but refuted claims that government spending or corporate profit taking was inflating prices.
The October 3 RBA board meeting stressed low tolerance for slower inflation return to target. In response to Liberal senator Jane Hume’s criticism on government spending, Bullock denied its impact on inflation and cited stable aggregate profit margins in sectors outside mining. When asked by Greens senator Nick McKim about concerns of a wage-price spiral, she dismissed them.
Treasurer Jim Chalmers supported Bullock’s fiscal strategy endorsement against the backdrop of rising inflation pressures.
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