Earlier:Bullock’s comments sent a mixed signal for the Australian dollar and the front end of the curve. Her warning that inflation is largely locked in for the next year, and that unemployment must rise further, underlines the RBA’s resolve. Her account of the dissent, though, suggests a significant minority is already wary of overtightening. That balance supports the view that further hikes remain possible but are far from assured, limiting the scope for a strong rebound in the AUD after its post-decision dip. For Australian equities, the explicit acceptance of weaker growth and higher unemployment adds to pressure on rate-sensitive sectors such as banks, retailers and property, which the RBA itself identified as under strain. Bullock’s suggestion that the board should now wait for data tilts the balance toward a pause, reducing the chance of a near-term follow-up hike and capping the AUD’s rebound potential.-- Bullock made the case for accepting some economic pain now to stop inflation becoming entrenched, but her description of the dissent shows a board increasingly divided over how far to push. Summary:RBA Governor Michele Bullock said the rate rise was needed to bring inflation down and was aimed at addressing local capacity pressuresShe said growth will need to remain subdued and unemployment will need to rise furtherBullock argued that accepting some pain now would prevent greater pain laterThe three members who voted to hold saw more downside risks and felt the board should wait longer for dataBullock said inflation is largely baked in for the next year, describing that as not a good situation to be inThe RBA raised its cash rate 25 basis points to 4.85% earlier on Tuesday in a 6-3 vote, its highest level in 18 yearsBullock said she does not know what the next rate move will be, offered no guidance and said it is probably good to wait now and see incoming data.Bullock said monetary policy will work but takes time to feed through, noting unemployment is still relatively low, jobs growth continues and she does not see the economy crackingReserve Bank of Australia Governor Michele Bullock said on Tuesday that the central bank’s latest rate rise was needed to bring inflation down, and that the economy will have to endure subdued growth and higher unemployment to get there.Speaking at her press conference after the board lifted the cash rate by 25 basis points to 4.85%, Bullock said the tightening was aimed at domestic capacity pressures. She argued that accepting some pain now would help prevent further pain down the track. Growth will need to stay subdued and unemployment to rise further, she said.Bullock was frank about the near-term inflation outlook. She said inflation is largely baked in for the next year and described that as not a good situation to be in. The comments align with the RBA’s updated forecasts, released alongside the decision, which see headline inflation peaking at 4.5% in the December quarter and both headline and trimmed mean inflation staying above 3% until late 2027.The governor also shed light on the board’s division. Six members voted for the hike and three preferred to hold at 4.60%. Bullock said those favouring a hold saw greater downside risks to the economy and felt the board should wait a little longer for more data before acting. On the outlook, Bullock said she does not know what the next move in rates will be and that the board is not offering forward guidance. She added that it would probably be sensible to wait now and assess incoming data, comments likely to reinforce speculation that Tuesday’s increase could be followed by a pause.The RBA publishes its votes without attributing them to individual members, so the identities of the dissenters have not been disclosed.The hike, the RBA’s fifth this year, takes the cash rate to its highest level since 2008. In its statement, the board said it would remain attentive to the data and do what is necessary to return inflation to target, without explicitly committing to further increases. The Australian dollar fell after the decision, which markets had widely expected, amid some speculation that the split vote could mean this is the last hike of the cycle. Bullock also expressed confidence that the tightening will have the intended effect, saying monetary policy works but takes time to feed through to the economy. She noted that unemployment remains relatively low and that jobs growth is continuing, adding that she does not see the economy cracking at this point.---Earlier:Reserve Bank of Australia (RBA) 25bp rate hike, as widely expectedMore: RBA lifts cash rate to 4.85% in split 6-3 vote, sees inflation above 3% until late 2027Overseeing the cash rate rising to its highest 18 years is not an easy gig for the RBA Governor. This article was written by Eamonn Sheridan at investinglive.com.