Australians are poorer because of war on the other side of the world – Michele Bullock’s logic is hard to fault

As far as rallying cries go, Michele Bullock’s “we are poorer, and there is no way out of that” leaves a lot to be desired.

It’s not going to win you any applause, particularly when you’re the governor of a central bank that has just announced a third rate hike.

But as a blunt way to describe what the US-Israel war on Iran means for everyday households, it’s hard to fault.

“Australians are poorer because of this shock to oil prices and energy prices and all the other commodity prices that are being impacted,” Bullock told journalists.

“So yes, we are all feeling poorer. That’s what this has done, this war on the other side of the world.”

The RBA’s latest forecasts confirm this: higher prices and lower growth. Pay packets that can’t keep pace with inflation. An economy that grows at an “anaemic” rate of 1.3% in 2026, or half the pace of the year before.

Sign up for the Breaking News Australia email

Not a recession, Bullock said, even in the worse of two more pessimistic scenarios considered by the central bank. But an economic malaise that Australians had dearly hoped to have escaped barely six months ago.

The good news: the RBA’s experts reckon unemployment should stay reasonably steady, in the low fours, through to the end of this year.

In other words, you will be poorer but you should keep your job. As silver linings go, it lacks some shine.

The decent thing to do, one would think, is not to pile further pressure on mortgage holders with higher interest rates.

But Bullock, who has one blunt tool, says it’s not the next six months she is focused on. That is locked in, she reckons. The fuel shock is here and will work it’s way through the economy.

There were some other glimmers of sunlight. Tuesday’s rate raise gives the RBA’s rate-setting board “space to see how the conflict plays out”.

Bullock repeated a variation of this phrase a few times during Tuesday’s press conference, and it’s reasonable to interpret this as her saying that another rate hike is not a done deal.

On the other hand, analysts at NAB thought the RBA was more worried about inflation than expected, and said they now thought the central bank would hike again when it next meets in June.

Of course, what happens in Iran will determine what happens next.

But there’s another, more immediate, thing that’s also out of Bullock’s control: next Tuesday’s budget.

If we are all getting poorer thanks to the Iranwar, the government’s instinct will be to shield us as much as possible.