At a Senate session today, RBA Governor Michele Bullock indicated that the central bank has not yet conducted detailed scenario analyses on how Donald Trump’s US presidential victory might impact Australia’s monetary policy.
Bullock emphasized that the effects could go different directions. She pointed out that while a Trump presidency might be “inflationary in some ways,” particularly if it leads to increased global demand or fiscal stimulus, it could also be “deflationary” if China, a key trading partner for Australia, is negatively affected.
Bullock stressed the importance of basing policy decisions on concrete developments rather than speculation. “We cannot be setting policy on the basis of things that could happen or might not happen,” she remarked. She added that the central bank intends to “wait and see what actually does happen” before making any adjustments.
As it stands, RBA has not revised its inflation outlook. Bullock reiterated that inflation is expected to return to the target band of 2-3% sustainably by 2026.
