[PRESS CONFERENCE] RBA Governor Bullock says inflationary pressures to last longer than expected; inflation is driven by domestic capacity pressures; Board will raise rates again if needed

INFLATION Will not put too much emphasis on the August CPI number. If inflation comes down, then it's possible no more hikes are needed. She hopes four rate hikes will be restrictive enough to slow inflation. Confident the RBA will get inflation back down. Need to see quarterly core inflation numbers sitting around 0.6%; Q3 CPI numbers will only confirm what RBA already knows. RATES Considered between holding rates and a 25bps hike. Raising rates impacts inflation via AUD channel. Aiming to tighten in a measured way in order to keep inflation coming down towards target. Board did not take this decision lightly, had to do it to bring inflation down. Will do what is needed with rates. Rates are in restrictive territory, towards the top of neutral; unclear how restrictive rates are. There was a case for holding rates discussed today. RISKS Risks to inflation from AI are building. Middle East implications have been worse than they had originally forecast. One upside inflation risk has materialised; two are building. A number of inflationary pressures are making for a very difficult situation. Forecasts do see inflation coming back to target; however, they continue to get hit by additional or increasing shocks. ECONOMY Unemployment rate is still historically low. Excess demand needs to be reduced, and a recession is not the RBA’s central case. Can have a gradual rise in the unemployment rate without job losses. The economy wouldn't be seen as a stagflationary one at the moment. Does not think that unemployment is very high. No wage-price spiral in Australia. Theoretically, a scenario where putting the economy into a recession could be required. And that would be under the scenario of inflation expectations getting unanchored. However, it does hope that that obviously won't happen. FINANCIAL CONDITIONS Need tight financial conditions. The Board thinks financial conditions are restrictive. MIDDLE EAST Conflict has been a big shock. The longer the conflict lasts, the more likely businesses will pass on costs. BOND MARKETS Bond markets are reacting in an orderly way, but the RBA is watching closely. Describes the global bond market is not alarmed but alert.