RBA Governor Bullock
  • Inflation challenge is increasingly driven by homegrown demand
  • 'More substantial' mon pol tightening is right response to demand-driven inflation
  • Supply-chain inflation is easing and has a bit further to run
  • Service costs rising strongly as demand outstrips supply
  • RBA liaison with firms indicates domestic cost pressures are proving persistent
  • Will take time to get inflation back to 2-3% target
  • Board seeking to cool demand while keeping employment growing

These are hawkish comments but the RBA showed its hand at the latest meeting and AUD/USD is unmoved. It remains down 25 pips on the day at 0.6528.