Bullock Speech: RBA Governor sheds light on policy path after maintaining interest rate

Reserve Bank of Australia (RBA) Governor Michele Bullock is speaking at the press conference, explaining the reason behind maintaining the interest rate at 4.1% in the April policy meeting.

Bullock is taking questions from the press as part of a new reporting format introduced by the central bank this year.

Key quotes from the RBA press conference 

Have to be careful not to get ahead of ourselves on policy.

Board did not discuuss a rate cut.

Holding rates was a consensus decision.

Risks are on both sides for inflation.

Board has not made up its mind on a May move.

Gradually getting more confidence on inflation, not 100% yet.

Seems prudent to wait for a bit more data.

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This section below was published at 03:30 GMT to cover the Reserve Bank of Australia's monetary policy announcements and the initial market reaction.

The Reserve Bank of Australia (RBA) announced on Tuesday that it left the Official Cash Rate (OCR) unchanged at 4.1% after concluding its April monetary policy meeting.

The decision aligned with the market expectations.

Summary of the RBA monetary policy statement

The outlook remains uncertain.

Underlying inflation is moderating.

Sustainably returning inflation to target is the priority.

Monetary policy is well placed to respond to international developments if they were to have material implications for Australian activity and inflation.

The board’s assessment is that monetary policy remains restrictive.

The continued decline in underlying inflation is welcome, but there are nevertheless risks on both sides and the board is cautious about the outlook.

Board needs to be confident that this progress will continue so that inflation returns to the midpoint of the target band on a sustainable basis.

Cautious about the outlook.

Uncertainty about the outlook abroad remains significant.

Recent announcements from the United States on tariffs are having an impact on confidence globally,, and this would likely be amplified if the scope of tariffs widens.

Inflation, however, could move in either direction.

AUD/USD reaction to the RBA interest rate decision

The Australian Dollar picks up fresh bids on the RBA’s decision. The AUD/USD pair is adding 0.24% on the day to trade at 0.6260 as of writing.

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This section below was published on March 31 at 21:45 GMT as a preview of the Reserve Bank of Australia (RBA) policy announcements.

• The Reserve Bank of Australia is expected to keep rates on hold in March.
• RBA Governor Michele Bullock’s comments could trigger some market reactions.
• The Australian Dollar is weak ahead of the announcement amid ruling risk aversion.

The Reserve Bank of Australia (RBA) is having its monetary policy meeting and will announce its decision early on Tuesday. The RBA is expected to keep the Official Cash Rate (OCR) steady at 4.10% following the interest cut delivered in February. 

Back then, the central bank announced a 25 basis points (bps) trim, the first one since late in 2020. The new decision will be announced at 03:30 GMT, and Governor Michele Bullock’s press conference will follow at 04:30 GMT.

RBA to hold, eyes on Governor Bullock’s clue on interest rate 

The RBA had maintained the OCR at multi-year highs for longer than any other central bank, however, tepid economic growth took its toll on policymakers, which finally delivered in February.

“The Board’s assessment is that monetary policy has been restrictive and will remain so after this reduction in the cash rate. Some of the upside risks to inflation appear to have eased and there are signs that disinflation might be occurring a little more quickly than earlier expected. There are nevertheless risks on both sides,” the February statement reads.

Even further, policymakers added: “The forecasts published today suggest that, if monetary policy is eased too much too soon, disinflation could stall, and inflation would settle above the midpoint of the target range. In removing a little of the policy restrictiveness in its decision today, the board acknowledges that progress has been made but is cautious about the outlook.”

Subtly, officials suggested they would have a cautious approach to interest rate cuts. With that in mind, market players anticipated no movements in March, moreover considering the Q1 Gross Domestic Product (GDP) will not be released until the end of April. Policymakers will likely wait for the growth update and additional inflation data before deciding on the next movement.

It is worth remembering that the Australian economy grew 1.3% in the final quarter of 2024, slightly better than the 1.2% anticipated by market participants. Exports supported broad-based growth, which, anyway, was considered “modest” by the Australian Bureau of Statistics (ABS).

Meanwhile, headline inflation dropped to a three-year low of 2.4% in the three months to December, according to Consumer Price Index (CPI) data, while underlying inflation shrank to a three-year low of 3.2%. The figures made it easy for the RBA to deliver a rate cut. Still, the next quarterly inflation report will be out in roughly a month, giving RBA policymakers another reason to delay modifying rates until May. 

With no changes expected in the OCR, the focus will be on Governor Michele Bullock’s words and any hint she may offer about the future of monetary policy. Whereas the Board discussed rate cuts or not would give a picture of how concerned officials are. The more dovish the perspective, the more chances of an interest rate trim in the foreseeable future. 

How will the Reserve Bank of Australia's decision impact AUD/USD?

Ahead of the announcement, the Australian Dollar (AUD) is under strong selling pressure, with the AUD/USD pair approaching the 0.6200 mark and trading at its lowest since March 4. The ongoing slump has little to do with Australia and is purely linked to market panic amid United States (US) tariffs. President Donald Trump is set to launch his “Liberation Day,” that is, massive reciprocal tariffs on Wednesday, while threatening to add more levies on US imports. Financial markets fear this will take its toll on global growth. 

Valeria Bednarik, Chief Analyst at FXStreet, notes: “The AUD/USD pair is bearish ahead of the announcement, and the odds that the RBA can trigger a recovery seem limited. The anticipated on-hold decision, the most likely outcome, and the fact that the Board will wait for more data, anticipate that the decision could be a non-event. Tariff-related concerns are expected to keep overshadowing macro announcements.”

“Indeed, a surprise announcement, such as an unexpected rate cut or hike, could result in crazy volatility around the AUD/USD,” Bednarik adds, although clarifying that both are quite unlikely scenarios. 

Finally, Bednarik notes: “From a technical point of view, the risk skews to the downside, given that the AUD/USD pair daily chart shows it develops below all its moving averages, while the downward momentum remains strong. Below the 0.6200 mark, the next relevant support is the March monthly low at 0.6186, followed by the 0.6130 price zone. Resistance, on the other hand, comes at around 0.6300, followed by the recent highs in the 0.6330 region.”