Financial markets simply don’t believe Michele Bullock when she threatens the Reserve Bank will raise interest rates to tackle high inflation — making a surprise move more likely on Tuesday. This is despite both headline and underlying inflation, without volatile price items, both remaining above the Reserve Bank of Australia’s 2-3 per cent target for the 11th straight month in June. On July 28 - the day before new inflation data was released - Ms Bullock threatened the Reserve Bank was still prepared to raise the existing 4.35 per cent cash rate. Australia’s major lenders are also no longer expecting rate hikes, as the futures market dismisses RBA threats to hike again. The Reserve Bank last surprised financial markets in July last year when the monetary policy board, in a 6-3 vote, opted to keep interest rates on hold at 3.85 per cent.