Australia's most powerful banker Reserve Bank Governor Michele Bullock has been trying to scare you - but Westpac's chief economist Luci Ellis claims it's all bluff

A erstwhile Reserve Bank insider has hinted her erstwhile leader has been waging a scare run on inflation.

Reserve Bank Governor Michele Bullock past period confirmed her committee considered an involvement complaint hike but not a complaint chopped arsenic it near the currency complaint connected clasp astatine a 12-year precocious of 4.35 per cent.

The connection 'inflation' was besides mentioned 24 times successful the accompanying connection and 60 per cent of consumers surveyed this period by Westpac are expecting different complaint rise.

Rate emergence fears person been heightened aft caller information showed ostentation successful the twelvemonth to May edging up to 4 per cent, putting it further supra the RBA's 2 to 3 per cent target.  

But Westpac chief economist Luci Ellis, a erstwhile RBA adjunct politician who worked astatine the Reserve Bank for 3 decades, said the information the European Central Bank past period chopped rates meant Australia was much apt to bash the aforesaid thing.

'The Reserve Bank committee volition besides beryllium mindful that different cardinal banks person already started cutting rates oregon are actively contemplating doing truthful soon,' she said successful a video connected Friday.

'Now they don't person to determination successful lockstep with their peers overseas but the acquisition of different cardinal banks has been a usher for however things whitethorn play retired successful Australia.

'We saw a communal planetary ostentation daze and truthful they volition instrumentality the lessons of elsewhere successful presumption of reasoning astir however rapidly ostentation mightiness travel down.'

Dr Ellis, who could person go a Reserve Bank politician if she had stayed astatine the RBA, is expecting rates to stay connected clasp astatine the adjacent gathering successful August. 

'Now, 1 should ne'er accidental ne'er and if ostentation does extremity up being stronger than we expect, it is imaginable that the Reserve Bank committee whitethorn consciousness that they person to enactment but that is not our halfway view,' she said. 

June 4th ostentation data, owed for merchandise connected July 31, could marque a complaint chopped successful 2024 much apt if the user terms scale is little than the March quarter's 3.6 per cent level. 

'Inflation is excessively precocious but it is coming down. If ostentation turns retired astir arsenic we expect, successful the June quarter, past that means that it is declining astatine broadly the gait that the Reserve Bank is hoping for,' Dr Ellis said.

'An result similar that would enactment the Reserve Bank keeping rates connected clasp successful the abbreviated word earlier yet starting to chopped rates arsenic ostentation starts to attack their 2 to 3 per cent people range.

'You tin ne'er foretell the aboriginal perfectly but that is the result that we deliberation is much likely.' 

Westpac and the Commonwealth Bank are some expecting a November complaint cut, which would beryllium the archetypal easing since November 2020 during Covid. 

But NAB has adjusted its forecasts to person the archetypal complaint chopped occurring successful May, alternatively of November, delaying alleviation from the much assertive hikes since the precocious 1980s.

ANZ past period updated its forecasts to person a February complaint cut.

Ms Bullock successful June confirmed a complaint emergence was debated but not a complaint cut.

'Yes, the committee did sermon the lawsuit for expanding involvement rates astatine this meeting,' she told reporters.

'No, the lawsuit for a chopped was not considered,' she said.

The Westpac-Melbourne Institute user sentiment survey for July showed 60 per cent of the 1,200 respondents surveyed were expecting different complaint emergence - suggesting the RBA's ostentation warnings are having immoderate effect.

Ms Bullock didn't notation the connection 'inflation' erstwhile astatine this week's Pacific Banking Forum meal successful Brisbane but she had antecedently talked astir managing the inflationary expectations of consumers truthful they spent less.