The direction of travel just reversed. As Australian Broker reported, RBA Governor Michele Bullock told Parliament that inflation may stay higher for longer, and that the Bank is still weighing whether current policy is tight enough to bring it back to target.
The numbers behind the warning are the story. Headline CPI came in at 3.5% and trimmed mean at 3.6% in July, easing slightly, but still above the 2% to 3% target band. The cash rate sits at 4.35% after three increases in 2026. On Friday, futures priced a 93% probability of a hike at the 28–29 September meeting.
Bullock named two upside risks that are outside anyone's control: the Middle East conflict pushing up oil and shipping costs, and the global AI boom lifting prices for supply-constrained technology. Neither responds to Australian monetary policy, which makes the Bank's job harder and the outcome less predictable. Bullock herself would not commit, saying only that current policy "may be enough" or "may be that it is not." Chris Brown, managing director at New Vision Financial, told the publication the September call was "a flip of a coin."
What it changes for a business borrowing
The Bank has repeatedly said it will not consider cutting until inflation is back inside the 2% to 3% band. With July's prints above that and a hike now the market's base case, any expectation of near-term relief is no longer safe to build on.
Variable facilities move with the cash rate, so a September increase would flow through to repayments on existing debt. Fixed pricing already reflects the market's hike expectations, which is why any "lock it in now" logic is doing less work than it appears, the future is priced in, not avoided.
The practical step is unglamorous: stress-test serviceability against a higher cash rate, not a lower one. The decision itself lands on 29 September. Until then, the only certainty is that the Bank is no longer promising relief.
General information only.