Australia: RBA’s Bullock: Incrementally dovish

Research evidence excerpt

Australia: RBA’s Bullock: Incrementally dovish

Goldman Sachs Australia

affecting the housing market, and a general softening in housing market sentiment”.

But Governor Bullock stressed that “the easing in established housing prices has so

far been modest, following a period of strong growth” and “monetary policy doesn’t

target housing prices.”

n On the labour market, Governor Bullock noted that conditions “eased a bit more

than expected over recent months” as the “unemployment rate has risen by

somewhat more than expected”. At the same time, she flagged that “other

indicators, such as job advertisements, have remained more resilient” and “that

some firms paused hiring in the early stages of the conflict, but some hiring activity

seems to have resumed more recently”.

n On the impact of oil shocks, Governor Bullock reflected on the 1970s oil price

shocks noting that policy “initially sought to support activity in the face of the shock

… [b]ut over time, higher inflation expectations became embedded” and that

“[p]utting off a period of tight monetary policy today can mean higher rates and

higher unemployment down the track”. Governor Bullock noted that the “recent oil

price shock has had a more limited impact on activity” compared to the 1970s

because the “economy is less dependent on oil”, monetary policy frameworks have

adopted inflation targets, and “economies are more dynamic”.

n In the subsequent Q&A:

o When asked whether the upcoming August meeting was ‘live’, Governor

Bullock acknowledged that the housing market was slowing by “more than

[the RBA] were expecting” and that there would be “some impact on

underlying inflation” from cost increases that the RBA can’t “do anything

about” She emphasised that the question for policy was whether prices