MNI BRIEF: RBA's Bullock Says Rates Not Restrictive Yet

Reserve Bank of Australia Deputy Governor Michele Bullock said the cash rate was not "necessarily in restrictive territory yet" as she defended losses related to its Bond Buying Program.

She said the Board, which next meets on Oct 4, was "looking to see whether there are opportunities to taper a bit and slow the pace, but we haven't got a pre-set path". She said the focus remained on inflation and employment outcomes, adding the Bank would not immediately look at the new monthly Consumer Price Index in determining policy. "There needs to be a little bit of water under the bridge with monthly numbers to see what sort of information content is in them".

Speaking after the Bank's review into its Bond Purchase Program, Bullock said future bond buying would only be considered when "we've got no gas left in the tank". She defended possible losses of up to AUD58 billion, saying that considering the financial loss in isolation wasn't particularly helpful. "You have to think about it across government and across the economy". She added that it was important for the Bank to return to positive equity - after it recorded a AUD36.7 billion accounting loss in 2021/2022 - as it was "important" to have a solid balance sheet.

Bullock said the global outlook was "quite uncertain and worrying". She said the Chinese property market was "huge" and prospects for recovery would impact on steel demand and iron ore prices.