![\"Bullock](\"https:\/\/www.europesays.com\/australia\/wp-content\/uploads\/2026\/05\/b53722216251e307e109c9bc74272c0f.jpeg\")
<\/p>\nWhile its economic forecasts were clearly based on rosy assumptions about the oil price, the absence of future fuel shortages in Australia, and the end of conflict in the Middle East, such a message coupled with the rate decision was designed to keep inflation expectations anchored. But there is just as much uncertainty about keeping inflation expectations anchored, as there is keeping a tanker sitting in the Strait of Hormuz. Each day there is a different story about the conflict which translates to a different interpretation of the oil price and how bad inflation gets in Australia. <\/p>\n
<\/p>\n
Asked whether the monetary policy board\u2019s decision to lift rates for the third time to 4.35 per cent was hurting households, Bullock didn\u2019t mince her words.<\/p>\n
\u201cInflation is actually hurting everyone,\u201d she replied.<\/p>\n
Asked if the bank had been too optimistic about oil price scenarios, she tried to allay concerns. \u201cI don\u2019t think we\u2019re being optimistic,\u201d Bullock said. \u201cWe are taking the assumption of the futures price curve. Even if oil prices stay up there, inflation will still ease a bit, because at least oil prices won\u2019t be increasing.\u201d<\/p>\n
The bank\u2019s forecast for higher-than-expected inflation of 4.8 per cent also seems rosy compared with Treasury\u2019s forecast of more than 5 per cent. The forecast hit to unemployment over the next year was also negligible. <\/p>\n
Two things though might have spooked consumers and businesses: the immediate impact of rate rises on inflation and a mention of the \u2018r\u2019 word.<\/p>\n
Bullock admitted that the RBA\u2019s interest rate hike wouldn\u2019t do much to stop inflation over the next six months. \u201cIt\u2019s hard, the shock with oil prices, there\u2019s nothing we can do about that,\u201d she said. \u201cThe first thing is that these interest rate rises are not going to do anything for inflation in the next six months. That\u2019s done and dusted.\u201d <\/p>\n
She also admitted that, if businesses did not get to pass the higher prices on, we could be looking at insolvencies and a recession. \u201cI think you\u2019d be wrong to expect that businesses would not look to pass on some of the costs of doing business,\u201d she said. \u201cIt\u2019s not unreasonable for them to want to recover their costs, because the alternative is they might end up going bust. Then you will end up in a recession.\u201d<\/p>\n
Tuesday\u2019s rate decision was tough news for Australians. <\/p>\n
The RBA, to its credit, had the integrity to deliver it. <\/p>\n
Matthew Cranston is The Australian\u2019s Economics Correspondent based in Parliament House. He is an award winning journalist who previously covered the Trump and Biden administrations as White House Correspondent in Washington.<\/p>\n","protected":false},"excerpt":{"rendered":"While its economic forecasts were clearly based on rosy assumptions about the oil price, the absence of future…\n","protected":false},"author":2,"featured_media":5966,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[22,21,5424],"class_list":["post-5965","post","type-post","status-publish","format-standard","has-post-thumbnail","category-australia","tag-au","tag-austrlia","tag-dink"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/australia\/wp-json\/wp\/v2\/posts\/5965","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/australia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/australia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/australia\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/australia\/wp-json\/wp\/v2\/comments?post=5965"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/australia\/wp-json\/wp\/v2\/posts\/5965\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/australia\/wp-json\/wp\/v2\/media\/5966"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/australia\/wp-json\/wp\/v2\/media?parent=5965"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/australia\/wp-json\/wp\/v2\/categories?post=5965"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/australia\/wp-json\/wp\/v2\/tags?post=5965"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"Matthew](\"https:\/\/www.europesays.com\/australia\/wp-content\/uploads\/2026\/05\/f730e204-d90b-4a11-b663-6a242e629dbd.png\")
<\/a>Matthew Cranston<\/a>Economics Correspondent<\/p>\n