RBA's Bullock Says Australia's Economy Is In "Pretty Good Spot"

Australia's economy is in a "pretty good spot" with inflation inside the central bank's 2-3% target band and the labor market still tight, Governor Michele Bullock said Friday.

“We've got a good unemployment rate so far. We've got inflation back in the band. We are in a pretty good spot,” Bullock told a parliamentary committee. She added that household consumption is picking up and filling the gap from waning public demand, a much-needed handover to ensure the economy keeps growing.

The RBA left interest rates unchanged at 3.6% last month — having eased three times since February — as it awaits further evidence that inflation is headed toward the midpoint of its 2-3% target. A stronger-than-expected pick-up in household consumption driven by real income growth, renewed strength in the housing market and a tight labor market are other reasons to keep rates steady.

Economists expect the RBA to ease policy following its Nov. 3-4 meeting, though many say the third-quarter inflation report on Oct. 29 will be a key factor in the decision. Ahead of the board gathering, officials will also review September jobs data, which is expected to show the unemployment rate ticking up to 4.3%.

The RBA's on-hold decision has come as central banks across the region have diverged in recent weeks, with Indonesia and New Zealand extending their easing cycles to support growth amid rising trade protectionism, while Thailand, Malaysia and Australia have held steady to assess the impact of earlier cuts.

Bullock welcomed recent data showing inflation is inside the the RBA's target though pointed to services inflation which remains “sticky.”

“At the moment we're in a situation where we've got inflation back in the band at the moment,” she said. “The key now is to make sure it stays there sustainably.”

On the international front, uncertainty is elevated with the outlook clouded by the Trump administration's protectionist policies, heightened geopolitical tension and a slowdown in Chinese demand. RBA officials have reiterated that their worst-case scenario on tariffs hasn't come to pass after Australia received the global baseline rate of 10% and with many nations refraining from retaliating against the US.