"I hope I didn't give any impression that there would be any interest rate cut by the end of the year,” Bullock said on Tuesday. “I certainly don't believe I ever gave people that impression and you would understand why I'm very cautious about suggesting any rate increases or decreases.”
But Bullock said interest rate cuts were not the silver bullet those suffering through the cost-of-living crisis might think it is.
“I would say to people who are struggling, part of the reason is not just interest rates. It's inflation,” she said.
This is the same rhetoric Yahoo Finance contributor Stephen Koukoulasexplained here just last week as hysteria started building about multiple rate rises off the back of unexpected March inflation figures.
There are many rising costs, driven by inflation, that aren't impacted by the "blunt tool" of interest rate rises.
Even petrol prices, which Bullock candidly admitted she had an “absolute shock” after recently trying to fill up her car.
"After all, interest rate hikes from the RBA will have approximately zero effect on global oil prices," The Kouk wrote.
Bullock's take? Her priority should remain to bring down inflation.
"That's the best thing I can do for them. I understand the interest rates hurt, but that's the tool I've got and that's the best thing I can do for them," she said.
RBA won’t hesitate to increase interest rates
Bullock did admit the RBA board considered increasing interest rates over the last six weeks, but acknowledged they are currently "restrictive" and have been "painful for many people".
"The process of returning inflation to target is unlikely to be smooth,” the RBA said in a statement following its decision to hold the cash rate steady.
Despite this, Bullock said the board will not hesitate to "see the job through" if further interest rates are needed.
"If we have to move, we will," she said.
She said the stickiness of inflation has been "frustrating", but reiterated, in somewhat of a nod to her predecessor's catch phrase of the 'narrow path', that she believed the RBA was on the "right path".
Recession warning if interest rates aren’t cut
The cash rate decision came just hours after the Australian Bureau of Statistics revealed retail sales volumes fell 0.4 per cent in the March quarter - the fifth time in the last six quarters.
Koukoulas described “miserable” numbers as proof Australians were pulling back their spending as he issued a warning that the economy desperately needs an interest rate cut or it risks plunging from our current per-capita recession into a “genuine” one.
“The economy is exceedingly weak. It's being crushed under the weight of oppressive monetary policy. Consumers are responding to the fact their cash flows are being hammered by high interest rates and cost of living pressures,” he said.
"We've got this situation where we're probably going to be on the cusp of not just a per capita recession, but genuine recession. The Reserve Bank needs to get on the spike and cut interest rates.”
Bullock said the board was doing everything in its power to avoid an economic crisis.
"We're not trying to tip the economy into recession because really the worst thing that could happen for many people is to lose their jobs,” she said.
Why is the RBA holding interest rates and when will they drop?
The path to an interest rate drop is "highly uncertain" and the central bank has admitted inflation has not only remained high, but it's dropping slower than expected.
"The Board expects that it will be some time yet before inflation is sustainably in the target range and will remain vigilant to upside risks,' the board said in a statement.
The RBA board said it would monitor the "global economy, trends in domestic demand, and the outlook for inflation and the labour market" before making any decisions about interest rate cuts, or hikes.
A key figure will be March GDP, which comes out in early June.
Economists are divided on an interest rate cut, some forecasting one in November and others claiming there's another three in our future.
Big four banks 2024 interest rate predictions:
Commonwealth Bank (CBA): Cash rate peak: 4.35 per cent. First cut: Likely November 2024. Rates to drop to 3.10 per cent in late 2025.
ANZ: Cash rate peak: 4.35 per cent. First cut: Around November 2024. Rates to drop to 3.60 per cent by this time next year.
NAB: Cash rate peak: 4.35 per cent. First cut: November 2024. Rates to drop to 3.10 per cent by the end of 2025.
Westpac: Cash rate peak: 4.35 per cent. First cut: November 2024. Rates to settle at 3.10 per cent in September quarter of 2025.
