The new RBA governor is not looking for any excuse to impose further rates pain.

Relax - new RBA governor Michelle Bullock is not looking for any excuse under the sun to raise rates.

New RBA Governor Michele Bullock at the RBA offices in Martin Place.

No, new Reserve Bank governor Michele Bullock is not itching – desperately, desperately, wanting an excuse, any excuse – to pull her shiny new interest rate lever.

To, in very exact particular, steal some thunder from the thoroughbreds, to grab the online headlines, just 30 minutes before the horses jump at Flemington, with the announcement of a Cup Day rate hike, at just her second meeting, presiding at the top end of Martin Place with its spectacular views across the Harbour.

Much of the economentariat got terribly excited Tuesday with that prospect.

“RBA puts rate increase on the agenda for Melbourne Cup Day,” one headline portentously intoned.

“November rate rise a live option,” another.

“Minutes confirm the November meeting is ‘live’,” came from one economist.

Two points to – very gently – hose-down these over-excited would-be commentators.

First, a rate rise has been formally on the agenda at each of the last three meetings – two under retiring governor Philip Lowe and indeed Bullock’s first meeting. Even though there was never the slightest prospect of any of those meetings actually delivering a rate rise. As I told you before each meeting. It all flowed from a policy initiated by Lowe earlier this year – and which does not yet seem to have permeated into the understanding of the economentariat – to have two options formally for discussion at every meeting. Even though he – supported by his deputy, Bullock – would bring to the meeting one specific policy recommendation.

The new practice made for a more robust and granular discussion and debate.

These are the inflation worries and the case for a rate hike. These are the jobs and slowing economy and the case for leaving the rate unchanged, even though inflation remains too high. But to repeat, this is what I, the governor, recommend – not hike, at all three meetings - and which the board then in each case unanimously endorsed.

The real news in the minutes of Bullock’s first meeting as governor, was that she continued Lowe’s ‘two-option’ process. Indeed, as I noted, after the decision itself two weeks ago, she quite deliberately signalled seamless continuity from the Lowe (and Bullock) era by using the exact – word-for-word – language in the key policy statement paragraph.

The second big point, which seemed to slide straight past the economentariat, is that these minutes detailed a board meeting, a discussion, and a decision that took place two weeks ago. All that discussion has been rendered if not exactly moot, at least ‘qualified’ by a certain subsequent event. Hint: Hamas, Israel. Gaza. No, the terrorist attack wasn’t quite the big economic and investment event like the GFC or Covid. But it certainly was not the event that would encourage the RBA to rush to a rate hike. Especially as it’s, to say the least, ‘not over’. As I have been explaining, next week’s CPI is all-critical. But it would take a very big, and very shocking, number – broadly, something north of 1.5 per cent for the quarter - to make Bullock consider a rate hike.

Even more so after the – deepening, spreading – horror in the Middle East.