Bullock Rules Out Stagflation as June Rate Decision Nears

RBA governor Michele Bullock says stagflation risks are low and long-term inflation expectations remain anchored at 2.5 per cent.

Australia's mortgage holders got some reassurance from the Reserve Bank of Australia on Thursday, even as global pressures continue to cloud the economic outlook. RBA governor Michele Bullock faced a Senate Economics Legislation Committee hearing on 4 June 2026, fielding questions on stagflation, inflation expectations, and the impact of geopolitical conflict on domestic borrowers. Her answers carry real implications for anyone holding — or considering — a home loan in Australia today.

The big takeaway for borrowers: Bullock is not concerned about stagflation taking hold in Australia, and she is not worried about a wage-price spiral either. But that does not mean the next rate decision, due at the RBA Board's two-day monetary policy meeting on June 15 and 16, is a straightforward one.

What Bullock Said at Senate Estimates

The Senate hearing, as reported by [ABC News](https://www.abc.net.au/news/2026-06-04/rba-not-concerned-about-stagflation-or-wage-price-spiral/106759122), covered a wide range of economic concerns — but the most relevant exchange for mortgage holders centred on inflation expectations and the risk of stagflation.

Stagflation — a combination of stagnating economic activity and persistent inflation — is widely regarded as one of the most damaging economic phenomena a central bank can face. RBA deputy governor Andrew Hauser had described it in those terms when he spoke to a New York audience in April: "The stagflationary shock: inflation up, activity down. Judging the balance between those two is, I guess, how we earn our money." He called it a "central banker's nightmare."

At Thursday's hearing, however, Bullock delivered a more measured read. "I'm not concerned about stagflation occurring in Australia at this point," she said. She pointed to Australia's economic growth, which came in at an annual pace of 2.5 per cent in the March quarter — matching the previous quarter and suggesting a degree of stability in the underlying economy.

On wage-price spirals, Bullock was equally direct. When Greens senator Nick McKim put to her that workers "basically have to cop whatever they can get now" and asked whether she was seriously concerned about a wage-price spiral, Bullock replied plainly: "I'm not concerned about a wage-price spiral, no."

A wage-price spiral — where workers repeatedly secure higher wages as inflation rises, feeding back into further price increases — was one of the central drivers of the stagflation Australia experienced in the 1970s. Bullock acknowledged that central banks have learned hard lessons from that era, which is why keeping inflation expectations anchored remains a top priority today.

On that front, she offered some measured optimism. Asked how she would characterise the risk of inflationary expectations becoming embedded in the economy, Bullock replied: "I'd say the risk is low." Long-term inflation expectations, she noted, "are remaining anchored around the target, around 2.5 per cent." Short-term expectations, however, "have definitely risen" — an honest acknowledgement of the pressures households are already experiencing at the checkout and the petrol bowser.

The Middle East conflict was a recurring thread through the hearing. Bullock described the situation as creating a "highly uncertain" environment that could see inflation rising even higher than anticipated, and said RBA staff expect it to "weigh modestly" on Australian economic growth this year. Her concern was less about an immediate shock to the economy and more about so-called second-round effects — whether higher fuel and energy costs eventually get embedded into business pricing and, ultimately, into people's long-term inflation expectations.

"To the extent that the price of fuel has gone up and it stays there, that's introduced a permanent cost increase to many industries as well, so they will put that into their prices. But there it should stop," she told the committee. The fear is that it doesn't — that those cost increases start feeding into wages and then back into prices in a self-perpetuating loop.

The timing of the hearing also coincides with notable wage data. The Fair Work Commission's recent annual wage review resulted in a minimum wage increase of 5.97 per cent, and minimum award workers received a 4.75 per cent pay boost. These are meaningful increases. On Bullock's analysis, they are not yet the kind of runaway wage growth that would trigger alarm — but they are numbers the RBA will be watching closely ahead of the June 15–16 board meeting.

What This Means for Your Mortgage

For borrowers, Bullock's testimony threads a careful needle. Nothing she said suggests the RBA is about to ease aggressively or move rates sharply in either direction. But it is clear confirmation that the board is not in crisis mode, and that the base case remains a gradual return toward the bank's target over time — which is ultimately good news for those hoping for further relief on their repayments.

Variable-rate mortgage holders should note that a contained inflation outlook — one where long-term expectations remain anchored near 2.5 per cent — is the environment in which the RBA has the most room to ease rather than tighten. Whether the board takes action at the June 15–16 meeting will depend on a range of incoming data, but Bullock's tone on Thursday suggested no immediate emergency, and no imminent reason to expect rate rises.

If you have a fixed rate rolling off in the next few months, now is the time to start comparing your options before you automatically revert to a variable rate. Use our [refinance savings calculator](/calculators/refinance-savings) to get a quick sense of what switching to a more competitive loan could save you, and our [borrowing power calculator](/calculators/borrowing-power) to model how much you could borrow at today's rates.

If you haven't reviewed your loan in the past year, [checking today's cheapest home loans](/home-loans/cheapest) is a smart first step — particularly with the RBA's June meeting on the horizon. A broker can help you assess whether your current rate still reflects what lenders are genuinely prepared to offer.