What is the Reserve Bank of Australia's current assessment of how higher interest rates are affecting the economy, according to Governor Michele Bullock?

Governor Michele Bullock stated that policymakers are seeing signs that policy tightening is working as intended—for example, housing market prices have fallen—but emphasized that recent rate hikes have no impact on the inflation already driven by rising oil and related commodity prices. She also noted tentative evidence that higher fuel-related costs are being passed through to other goods and services, including new-dwelling costs.

What are the latest key economic indicators cited in the article—specifically inflation, unemployment, and household consumption—and how do they inform the RBA's current stance?

The article reports that consumer inflation stood at 4.2% in April—well above the RBA’s 2%–3% target band—while the economy slowed sharply in Q1, household consumption unexpectedly fell in April, and the unemployment rate rose to a 4½-year high of 4.5%. These developments underscore the challenging environment the RBA faces: persistent inflation despite weakening demand and labor market softening, prompting the bank to raise rates three times in 2024 to 4.35% and conclude that monetary policy is now 'well-placed to respond to overseas developments'.