The appearance comes one day after Australia’s March quarter national accounts offered a mixed but broadly softening picture of the domestic economy.
Commonwealth Bank economists said the GDP data, which showed growth of 0.3% in the March quarter and an unchanged annual rate of 2.5%, contained enough evidence of easing price pressures to keep the RBA on hold from here. The bank sees annual growth slowing to around 1.5% by year end, weighed by softer household consumption, a weakening housing market and the inherently lumpy nature of data centre investment, which has been a significant but import-intensive driver of recent activity.
On inflation, CBA pointed to a material easing in unit labour costs as the most significant signal in the national accounts. Nominal unit labour costs came in at 3.2% and real unit labour costs at 0.6%, both substantially below the elevated rates of the past three years. The bank acknowledged some of that moderation may prove temporary, and flagged the Middle East conflict as a live risk, with higher energy and goods prices expected to pass through more visibly in coming months after the April CPI showed limited evidence of that pressure so far.
Markets are currently pricing no chance of a June hike and roughly even odds of a move in August. CBA’s base case is that the balance of risks between inflation and growth has become sufficiently symmetric to keep the board on hold through the remainder of 2026, with a formal June preview due from the bank’s economics team next week.
Thursday’s Senate hearing will be Bullock’s first public appearance since the May board meeting. With three hikes already delivered and a pause widely expected, the question before her is less about what the RBA has done and more about how much further it believes it may need to go.
Coming up at 3pm Sydney time / 0500 GMT / 0100 US Eastern time.
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The national accounts and CBA’s read of them give the RBA cover to pause in June, but the Senate hearing is unlikely to provide the all-clear markets are hoping for. Bullock, Kent and Hunter have no incentive to sound dovish after three consecutive hikes, and any signal that August remains live will be enough to keep the 50% hike probability priced there. The unit labour cost easing is the most genuinely encouraging data point for rates, but the Middle East passthrough risk means the RBA will not want to declare victory on inflation in a public forum. Watch for language around the April CPI and whether the board views the softening in activity as sufficient to offset lingering price pressures
