Michele Bullock, the Reserve Bank governor, concluded her final public appearance in 2024 saying: “It’s been a bit of a wild ride for me.”
Given the RBA hadn’t budged interest rates a jot for the whole year – the previous move was the November 2023 hike – assembled journalists might have wondered how Bullock will describe a concerted shift in either direction.
To be fair to the still-newish governor, Bullock must feel she is entering a snake pit every time she fronts the now routine post-rates-decision media events (and other assorted public engagements).
Journalists, of course, press for hints of what the central bank will do next. Some, too, might angle for fresh evidence of her “war” with the treasurer, Jim Chalmers. If the probing causes Bullock angst, her down-to-earth charm hides it well.
Mortgage-holders and other borrowers, though, might figure they’re the ones enduring a wild ride (and without Bullock’s $1m-plus annual salary as cushioning). The good news is 2025 should bring them some repayment relief – and possibly soon.
Markets had anticipated the RBA’s decision on Tuesday to leave the cash rate unchanged at 4.35% for a ninth meeting in a row.
It was the ditching of its “not ruling anything in or out” and other word changes that gave the verdict a “dovish” flavour. Investors duly responded by lifting their view of a 25 basis-point rate cut to 4.1% at the next board gathering on 17-18 February to a 70% chance, according to Bloomberg.
Bullock has stressed the RBA retains an open mind and its board’s assessments are “evolving as the data evolves”.
“We’re not saying that we’ve won the battle against inflation yet but we’re saying we’ve got a little bit more confidence that things are evolving as we think in our forecasts,” she said, adding the caveat that things might yet “move in either direction”.
Certainly, economic growth has been both disappointingly weak from the public’s – and the Albanese government’s – perspective.
The 0.8% annual growth pace in the September quarter would also have trailed the RBA’s predictions. It had pencilled a quickening of expansion from 1% in June to 1.5% by December, a target now unlikely to be met.
However, the labour market – the most encouraging part of the economy – has held up better than almost anyone had imagined. It’s a happy factor that could delay interest rate reductions.
“Employment grew strongly over the three months to October, the participation rate remains close to record highs, vacancies are still relatively high and average hours worked have stabilised,” the RBA’s statement noted. “At the same time, some cyclical labour market indicators, including youth unemployment and underemployment rates, have recently declined.”
We’ll get November’s numbers on Thursday, which may reveal whether this year’s hiring spree has reversed course.
Bullock, meanwhile, went out of her way to underscore the RBA and the government weren’t at cross-purposes. (Apart from keeping inflation within a 2% to 3% target range, its other mandate is to achieve an quantified “full employment” level, after all.)
“Public consumption is actually doing very good things at the moment,” particularly with its private equivalent “subdued”, she said. “It is contributing to services that Australians consume, things like health and aged care, and those sorts of things.”
Bullock also returned a bit of ire for “some commentators” who were “trying to make it sound like growth in non-market employment is not valuable”, Bullock said (without naming names – though readers of a certain broadsheet or business tabloid might recognise her targets).
“The jobs that these people are doing are very valuable jobs,” she said. “They are worthy jobs.”
Chalmers will unwrap the government’s mid-year economic and fiscal outlook next Wednesday, with some pre-election largesse guaranteed.
Bullock’s sentiments – and the prospects of an interest rate cut by 1 April at the latest – will no doubt be merrily received by the treasurer and the rest of his government. But if those tidings don’t come to pass, it might be Labor in line for a wild ride in 2025.
