RBA Governor Bullock says underlying demand in the economy is further from supply potential than they had assessed
- A large part of the unexpected increase in inflation was sector specific.
- Policy is well positioned to respond if needed.
Context
RBA Governor Bullock's remarks highlight a significant gap between underlying demand and supply potential, indicating that inflation pressures may be more contained and sector-specific than previously thought. This could suggest a more cautious approach to rate hikes, potentially alleviating immediate tightening fears in markets. Traders should keep an eye on the implications for the AUD and fixed income, as any shift in policy signals may influence risk sentiment across asset classes.
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