‘Ridiculous’: RBA boss’ haircut claim slammed

Hinting that further interest rate pain may be on the way to tackle “homegrown” inflation, the central banker said on Wednesday that domestic factors were the dominant driver of the cost-of-living crisis.

The comments sparked anger and mockery on social media.

“Breaking … bald people to lead the fight against inflation,” former independent MP Tony Windsor wrote on X.

One user commented, “Just read that the RBA governor is lashing out at people for having dental treatments and haircuts. Damn. Guilty as charged. I go to the dentist every year and had to have an extra minor procedure this year and planning on getting a haircut this week … damn.”

Another woman said, “This is the most ridiculous nonsense I believe I have ever heard from an ‘economist’. Michele Bullock also wants us to visit the dentist less. I mean Australia can possibly cope with bad hair, but bad teeth! Madness.”

Many noted that large corporations including the big banks and supermarkets were raking in billions of dollars in profits.

Others highlighted Australia’s record immigration intake as a driving factor.

“Labor’s mass immigration boosts aggregate demand,” one wrote. “Without the ability to service it means — INFLATION. Labor doesn’t care about this (or rate rises) of course.”

Ms Bullock’s comments to the Australian Business Economists network in Sydney continue in her predecessor’s tradition of tone-deaf statements.

Philip Lowe, who departed the role in September, made headlines with a series of “out-of-touch” public statements during the RBA’s crushing series of rate rises, including suggesting Aussies simply work more and spend less.

“New governor Michele Bullock absolutely smashing it in her quest to be even more unpopular than Phil Lowe,” wrote The Sydney Morning Herald’s Stephanie Peatling.

Ms Bullock’s declaration comes as the RBA mulls the need for further rate rises to slow the economy and bring inflation — currently running at 5.4 per cent — back to its 2 to 3 per cent target band.

Meanwhile, Domain data shows Australian house prices have hit new records, bouncing back from the drop in values since the RBA first started raising rates last year.

The RBA this month lifted the official cash rate by a further 25 basis points to a 12-year high of 4.35 per cent. It was the central bank’s 13th rate rise since May 2022. In April last year, the cash rate was 0.1 per cent.

“If we look across the CPI basket, around two-thirds of items have inflation running above 3 per cent — indeed, often a long way above that number,” Ms Bullock said on Wednesday.

“Hairdressers and dentists, dining out, sporting and other recreational activities — the prices of all these services are rising strongly. This reflects domestic economic conditions and is an indication that aggregate demand is sufficiently greater than aggregate supply to sustain these price increases. The cost of these services is also typically driven by the price of domestic inputs.”

Ms Bullock said the RBA expected this next phase of the inflation fight to take longer because of the domestic pressures as international factors ease.

“An important implication of this homegrown and demand-driven component to inflation is that getting inflation back to target will take time,” she said. “This shift from mainly supply-driven to mainly demand-driven inflation has been a part of our inflation outlook for some time.”

She said because of this the “blunt instrument” of rate rises was the right response. Ms Bullock acknowledged many Australians were doing it tough, but that struggle “emphasises the need to get inflation back down”.

“The bank’s statutory objectives are economy-wide outcomes, and our key tool — the interest rate — is a blunt one,” she said. “The board must therefore set its policy to serve the welfare of Australians collectively.”

Ms Bullock’s remarks on the domestic impact on inflation appears at odds with claims made by some members of the Albanese government, who have continually referenced global price pressures on the Australian economy.

“The world is inflicting price pressures on Australians and we are doing our best to ease them,” Treasurer Jim Chalmers said just a few weeks ago.

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— with NCA NewsWire