Michele Bullock’s Second Act: The Governor Who Cut, Then Had to Hike

When Michele Bullock became Governor of the Reserve Bank of Australia on 18 September 2023, she was the ultimate insider: a career central banker who had joined the bank in 1985 and worked her way through almost every corner of it. Three years on, that institutional knowledge is being tested by a problem she will have hoped was behind her. Inflation is back, and the Bullock-led Monetary Policy Board has spent 2026 raising interest rates.

From Armidale to Martin Place

Bullock grew up in Armidale in the New England region of New South Wales and studied economics at the University of New England, graduating with honours in 1984. She joined the RBA the following year and later completed a master’s degree in economics at the London School of Economics in 1989.

Her RBA career covers the full range of the bank’s work. According to her official biography, she spent her early years in the Economic Group and International Department, then ran the Payments Policy Department, served as Assistant Governor responsible for currency, then business services, and then the financial system, before becoming Deputy Governor in 2022. Payments policy, banknotes and financial stability are not the most glamorous parts of central banking, but they gave her a detailed working knowledge of the plumbing of Australia’s financial system.

Her appointment was historic. She is the first woman to lead the RBA, and she took over as the bank implemented the recommendations of the 2023 independent review, which created a separate Monetary Policy Board. She now chairs that board, as well as the RBA’s Governance and Payments System boards and the Council of Financial Regulators.

A round trip on rates

The past two years have been a lesson in how quickly the economic picture can turn. In 2025, with inflation easing, the board cut the cash rate three times, taking it from 4.35% to 3.60% by August.

In 2026 those cuts were reversed and more. The board lifted the cash rate by 25 basis points in February, March and May, held in June and August, then raised it again on 29 September to 4.60%. That is 100 basis points of tightening in a single year.

Bullock was blunt when she explained the September decision. “Higher interest rates are needed to ensure inflation returns to target,” she told reporters. “Inflation is too high and has been driven by domestic capacity pressures.” She pointed to stronger-than-expected domestic spending and investment, weak productivity growth, a labour market that “remains a little tight”, and rising oil prices linked to conflict in the Middle East.

She also identified a newer source of price pressure: the global boom in artificial intelligence investment. It had “driven significant price rises for some inputs within the AI supply chain, including software costs and some commodity prices”, she said, adding that “the AI boom is also adding to demand in the Australian economy at a time when we already have capacity pressures.”

Plain speaking

Bullock’s communication style is direct, and she does not shy away from the human cost of her decisions. “I know this decision is difficult for households with a mortgage and businesses with loans, but high inflation hurts all Australians, especially the most vulnerable,” she said in September. Her message on what comes next was equally clear: “The Board will increase interest rates again if that’s what’s needed to get inflation down.”

Appearing before Senate Estimates on 28 October, she framed the board’s next decision around a single question: “whether the tightening in monetary policy to date will be sufficient to bring inflation back to target in a reasonable time.” The board’s next decision, along with the RBA’s latest economic forecasts, is due on 3 November.

What it means for business

For borrowers, brokers and CFOs, the Bullock era has meant learning to live with two-way risk on rates. The easing cycle of 2025 encouraged refinancing and new borrowing; the reversal of 2026 has pushed up debt-servicing costs just as businesses grapple with higher energy and input prices. Commonwealth Bank, the country’s biggest lender, noted in August that higher interest rates and inflation were placing “uneven pressure on household incomes and economic activity”.

Bullock’s term as Governor runs until 2030. Whatever the board decides in November, the defining test of her tenure is now clear: getting inflation back to the middle of the 2–3% target range without breaking a labour market that has stayed remarkably resilient.