Inflation will tell if RBA’s pre-election cut is the right call
We don’t doubt that Bullock and the board have conducted themselves independently. Yet the credibility of the central bank will ultimately depend on whether inflation continues to come down.
The Reserve Bank of Australia’s one-page statement issued immediately after the announcement of the first cut to interest rates in more than four years neatly encapsulates the dilemma faced by governor Michele Bullock.
On the one hand, the central bank says the decision to lower the cash rate from 4.35 per cent to 4.1 per cent was prompted by inflation falling “a little more quickly than earlier expected”.
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