Australia's central bank governor, Michele Bullock, stated on Friday that the board must decide later this month whether the current benchmark interest rate is sufficiently restrictive to curb price pressures and steer inflation back to target levels.

"The monetary policy committee will convene in just over a week. We will discuss our assessment of the incoming data flow and how risks are evolving," Bullock said in her opening remarks to a parliamentary panel on Friday. "A critical question is whether the monetary tightening delivered so far is adequate to bring inflation back to target within a reasonable timeframe."

The Australian dollar edged higher as markets interpreted the governor's comments as slightly hawkish. Bullock typically chooses her words carefully to avoid being seen as pre-judging the central bank's decisions. Yields on three-year government bonds trimmed earlier losses, with traders strengthening expectations for a rate hike at the Reserve Bank of Australia's September meeting.

Traders now see an approximate 90% probability of a rate increase at that meeting, up from around 84% before Bullock's testimony to parliament. This marks Bullock's first major public remarks since the RBA's August policy decision, where the board held the key rate steady at 4.35% for a second consecutive meeting.

Officials have consistently signaled growing concern that inflation remains too high and has persisted for too long, while also worrying about further upward pressure on prices. Bullock acknowledged, "I understand that higher rates create difficulties for Australians carrying mortgages and facing cost-of-living pressures. But bringing inflation down is absolutely essential."