'The board will not hesitate': RBA governor issues interest rate rise warning

Michele Bullock has used her first speech as RBA governor to warn Australians the central bank won't hesitate to hike interest rates once again if there is a risk of inflation rising.

In an address to the Commonwealth Bank Global Markets Conference on Tuesday, Bullock reiterated the Reserve Bank's commitment to bring inflation back to its target band of 2 per cent to 3 per cent "within a reasonable timeframe".

"It is possible that this can be done with the cash rate at its current level but there are risks that could see inflation return to target more slowly than currently forecast," she said.

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"The board will not hesitate to raise the cash rate further if there is a material upward revision to the outlook for inflation.

"At the same time, the board is mindful that growth in demand and the rate of inflation have been moderating, and that there are long lags in the transmission of monetary policy."

The RBA's next interest rate meeting is two weeks away. Before then, official quarterly inflation data and employment figures will be published – both of which will influence the bank's decision.

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"The board will receive several pieces of information before its next meeting that will be important for this assessment," Bullock said.

"This includes a full update of the staff's forecasts.

"We will reconsider the outlook for the economy in light of incoming information and will have opportunities to explain our assessment in the media release and Statement on Monetary Policy that will follow the November meeting."

Inflation has eased considerably since its peak of 8.4 per cent in December, but last month's data revealed an unexpected uptick from 4.9 to 5.2 per cent in August.

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Bullock's messaging is in keeping with the board's discussions at this month's interest rates meeting – her first as governor since replacing Philip Lowe – when the board opted to keep the cash rate on hold at 4.1 per cent.

"The board has a low tolerance for a slower return of inflation to target than currently expected," minutes from the October 3 meeting stated.

"Whether or not a further increase in interest rates is required would, therefore, depend on the incoming data and how these alter the economic outlook and the evolving assessment of risks."

The next interest rate decision will be made on November 7.