RBA Governor Michele Bullock spoke at the Melbourne University Faculty of Economics & Business Foundation Dinner in Melbourne on Wednesday. She said the economy is in a good place.
She said policy decisions are hard. She also said we need patience when judging the impact of policy.
Australian Dollar Reaction
After her comments, the Australian Dollar came under pressure. AUD/USD fell back to 0.7085 and was still up 0.41% on the day.
Her remarks suggest the RBA will stay steady. This supports the view that the cash rate will remain on hold for some time. In late 2025, quarterly CPI was a sticky 3.1%, which is still above the target band. Even so, today’s comments suggest the board sees this as manageable and is not ready to hike again right now.
For traders, this points to selling implied volatility in the Australian dollar over the next few weeks. The RBA’s focus on patience removes a major trigger for big, surprise moves in the currency or short-term rates. AUD/USD may trade in a tighter range, especially after the January 2026 unemployment rate eased slightly to 4.2%.
This view makes carry trades harder to manage, but they can still work against currencies backed by more dovish central banks. The US Federal Reserve has hinted at possible rate cuts later this year, which helps the AUD’s yield advantage for now. Trades that benefit from the rate gap can be kept, but profit targets should be more modest given the RBA’s neutral tone.
Market Focus And Strategy
It is worth remembering the sharp rate hikes in 2023 and 2024, which aimed to bring down high inflation. Today’s language is very different. It confirms the cash rate has likely peaked. The hurdle for more tightening is now very high and would need a clear upside surprise in inflation.
Because of this, it may make sense to focus less on RBA meeting dates and more on key data releases. The Q1 2026 inflation report is the next major checkpoint for the market. Until then, option strategies that benefit from low volatility, such as selling AUD strangles, may be the clearest approach.
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