1 00:00:05,400 --> 00:00:07,890 Sean Aylmer: Welcome to FEAR & GREED- The Week Ahead. I'm Sean Aylmer, 2 00:00:07,920 --> 00:00:11,099 Sean Aylmer: and as always, I'm joined by economist Stephen Koukoulas. You 3 00:00:11,099 --> 00:00:13,650 Sean Aylmer: find him at thekouk. com, T- H- E- K- O- U- K. 4 00:00:13,799 --> 00:00:16,920 Sean Aylmer: com, and on X using the handle The Kouk. Stephen, 5 00:00:16,920 --> 00:00:17,490 Sean Aylmer: good morning. 6 00:00:17,760 --> 00:00:20,340 Stephen Koukoulas: Good morning, Sean. It's nice and chilly, isn't it? In 7 00:00:20,340 --> 00:00:21,060 Stephen Koukoulas: the middle of winter. 8 00:00:21,540 --> 00:00:23,759 Sean Aylmer: It sure is. It's freezing along the East Coast of 9 00:00:23,759 --> 00:00:27,480 Sean Aylmer: the country. Now let's jump in to what happened last 10 00:00:27,480 --> 00:00:30,330 Sean Aylmer: week. I mean, we've got inflation figures this week, but 11 00:00:30,509 --> 00:00:32,400 Sean Aylmer: I want to talk about the reserve being board meeting 12 00:00:32,400 --> 00:00:34,589 Sean Aylmer: last week. What did you make of it all? Where do 13 00:00:34,590 --> 00:00:37,229 Sean Aylmer: we stand now compared to a week ago before we 14 00:00:37,260 --> 00:00:37,980 Sean Aylmer: got that statement? 15 00:00:38,460 --> 00:00:43,350 Stephen Koukoulas: Look, nothing much changed. The statement and the press conference 16 00:00:43,350 --> 00:00:47,460 Stephen Koukoulas: that Michele Bullock, RBA governor spoke at, outlined many of 17 00:00:47,460 --> 00:00:50,580 Stephen Koukoulas: the same issues. They're not sure about the speed at 18 00:00:50,580 --> 00:00:53,519 Stephen Koukoulas: which inflation's coming down. They think it might be a 19 00:00:53,519 --> 00:00:55,950 Stephen Koukoulas: bit resilient. That is, it's going to take longer to 20 00:00:55,950 --> 00:00:59,490 Stephen Koukoulas: get to the target. However, they acknowledged the economy's weak. 21 00:00:59,490 --> 00:01:02,190 Stephen Koukoulas: That March quarter GDP result, which came out a few 22 00:01:02,190 --> 00:01:06,030 Stephen Koukoulas: weeks ago, was very, very poor. They acknowledged the pain 23 00:01:06,030 --> 00:01:08,940 Stephen Koukoulas: that the household sector's in and that explains why household 24 00:01:08,940 --> 00:01:11,908 Stephen Koukoulas: consumption and retail spending in the like have been very, 25 00:01:11,910 --> 00:01:15,090 Stephen Koukoulas: very poor for the last, well, last 12 months or so. 26 00:01:15,090 --> 00:01:17,910 Stephen Koukoulas: So you add it all up and actually look at what financial 27 00:01:17,910 --> 00:01:22,979 Stephen Koukoulas: markets did. There's still basically no change in interest rates 28 00:01:23,039 --> 00:01:24,990 Stephen Koukoulas: other than a few little basis points up and down 29 00:01:25,289 --> 00:01:29,549 Stephen Koukoulas: before the first half of next year, so probably six 30 00:01:29,639 --> 00:01:32,759 Stephen Koukoulas: plus months of rates on hold according to market pricing 31 00:01:33,150 --> 00:01:36,720 Stephen Koukoulas: and like all of us mere mortals, the RBA mere 32 00:01:36,720 --> 00:01:38,220 Stephen Koukoulas: mortals too are just going to be looking at the 33 00:01:38,429 --> 00:01:42,450 Stephen Koukoulas: data on inflation, unemployment and what's happening in the global 34 00:01:42,450 --> 00:01:46,379 Stephen Koukoulas: economy too. While, Michele Bullock sort of downplay that the 35 00:01:46,379 --> 00:01:49,800 Stephen Koukoulas: rate cuts from Canada and Europe would be sort of 36 00:01:49,800 --> 00:01:53,790 Stephen Koukoulas: dovetailing specifically into their interest rate decisions and rate cuts 37 00:01:53,790 --> 00:01:57,809 Stephen Koukoulas: in those instances, she did acknowledge that what's happening in 38 00:01:57,809 --> 00:02:01,530 Stephen Koukoulas: the world economy is important, and so we'll just got 39 00:02:01,530 --> 00:02:04,020 Stephen Koukoulas: to keep an eye on all of these moving parts 40 00:02:04,020 --> 00:02:06,570 Stephen Koukoulas: to see well, which way they go and when they go. 41 00:02:07,170 --> 00:02:10,109 Sean Aylmer: Okay. So the most important data point at the moment 42 00:02:10,110 --> 00:02:14,250 Sean Aylmer: it seems is inflation and we actually get May inflation 43 00:02:14,250 --> 00:02:15,119 Sean Aylmer: figures out today. 44 00:02:15,450 --> 00:02:18,779 Stephen Koukoulas: Yes, they're out and they're going to be showing inflation 45 00:02:18,780 --> 00:02:21,239 Stephen Koukoulas: probably increasing in year- on- year terms. It's one of 46 00:02:21,240 --> 00:02:25,350 Stephen Koukoulas: these quirky ones which will create no doubt a huge 47 00:02:25,379 --> 00:02:29,340 Stephen Koukoulas: amount of havoc in markets because just on the year- on- 48 00:02:29,340 --> 00:02:33,689 Stephen Koukoulas: year run rate, there's a minus 0. 4 from May 49 00:02:33,690 --> 00:02:36,899 Stephen Koukoulas: last year dropping out of the run rate. We do 50 00:02:36,900 --> 00:02:39,239 Stephen Koukoulas: know that petrol prices were down a bit and a few 51 00:02:39,240 --> 00:02:40,949 Stephen Koukoulas: other things, but it's unlikely to be repeated. So if 52 00:02:40,949 --> 00:02:43,980 Stephen Koukoulas: we get just say a 0% change in the CPI 53 00:02:43,980 --> 00:02:46,050 Stephen Koukoulas: for the month of May, we're going to get that 54 00:02:46,050 --> 00:02:48,480 Stephen Koukoulas: annual rate back to 4%, which is sort of where 55 00:02:48,480 --> 00:02:51,210 Stephen Koukoulas: the market's looking at at the moment, even though we 56 00:02:51,210 --> 00:02:53,250 Stephen Koukoulas: know it's going to cascade lower the following month. It's 57 00:02:53,250 --> 00:02:57,029 Stephen Koukoulas: one of those ones where we love monthly inflation numbers, 58 00:02:57,330 --> 00:03:01,260 Stephen Koukoulas: but that volatility in month on month numbers as opposed 59 00:03:01,260 --> 00:03:02,850 Stephen Koukoulas: to quarter on quarter numbers where a lot of that 60 00:03:03,090 --> 00:03:06,988 Stephen Koukoulas: volatility smoothed out means we're going to probably get another 61 00:03:06,990 --> 00:03:10,290 Stephen Koukoulas: spike in inflation, which will get the rate hike campaigners, 62 00:03:10,530 --> 00:03:12,298 Stephen Koukoulas: sort of very vocal and very noisy. 63 00:03:12,780 --> 00:03:15,360 Sean Aylmer: Okay. And I mean, we will hear from the Reserve 64 00:03:15,360 --> 00:03:18,690 Sean Aylmer: Bank immediately, well, soon after the CPI figures because there 65 00:03:18,690 --> 00:03:20,010 Sean Aylmer: are a couple of speakers this week. 66 00:03:20,639 --> 00:03:24,090 Stephen Koukoulas: Yeah, two speakers. We've got Chris Kent, who's one of 67 00:03:24,090 --> 00:03:27,000 Stephen Koukoulas: the assistant governors giving a talk. I don't think we've got a 68 00:03:27,000 --> 00:03:31,199 Stephen Koukoulas: specific topic on the website yet, but inevitably it'll be 69 00:03:31,200 --> 00:03:34,350 Stephen Koukoulas: about how the economy's going. We've got the deputy governor, 70 00:03:34,350 --> 00:03:38,490 Stephen Koukoulas: the relatively new Deputy Governor Andrew Hauser, giving a bit 71 00:03:38,490 --> 00:03:41,310 Stephen Koukoulas: of a chat too on the economy later this week. 72 00:03:41,310 --> 00:03:44,460 Stephen Koukoulas: So they'll have embraced the CPI number to the extent 73 00:03:44,460 --> 00:03:47,400 Stephen Koukoulas: that that will drive any commentary, but also it gives 74 00:03:47,400 --> 00:03:51,419 Stephen Koukoulas: them a chance to flesh out how people, markets, whatever 75 00:03:51,420 --> 00:03:54,179 Stephen Koukoulas: have reacted to the decision of last week to keep 76 00:03:54,180 --> 00:03:57,060 Stephen Koukoulas: rates steady and of course, what Michele Bullock was talking 77 00:03:57,060 --> 00:03:59,160 Stephen Koukoulas: about at her press conference. So always good to hear 78 00:03:59,160 --> 00:04:02,130 Stephen Koukoulas: RBA speakers. Let's just see if they throw a few 79 00:04:02,130 --> 00:04:04,530 Stephen Koukoulas: little hints and a few little crumbs on what they're 80 00:04:04,530 --> 00:04:09,180 Stephen Koukoulas: thinking about the economy, inflation, unemployment, and all of the above. 81 00:04:09,809 --> 00:04:11,219 Sean Aylmer: Stephen, I've got to say, I think there's been an 82 00:04:11,219 --> 00:04:15,690 Sean Aylmer: outbreak of personality inside the Central Bank. Andrew Hauser has 83 00:04:15,690 --> 00:04:17,880 Sean Aylmer: been around the place a bit in the last few weeks. 84 00:04:18,270 --> 00:04:18,539 Stephen Koukoulas: Yeah. 85 00:04:18,570 --> 00:04:20,940 Sean Aylmer: Michele Bullock is certainly full of life in her press 86 00:04:20,940 --> 00:04:25,259 Sean Aylmer: conferences, and I mean that's no disrespect to the previous 87 00:04:25,259 --> 00:04:29,308 Sean Aylmer: incumbents. They were all in their own way lively, I'm 88 00:04:29,309 --> 00:04:33,240 Sean Aylmer: sure, but these two quite pairing. 89 00:04:33,659 --> 00:04:38,219 Stephen Koukoulas: Yes. Well, and this is the issue I think that 90 00:04:38,220 --> 00:04:42,659 Stephen Koukoulas: caused the RBA problems previously under Dr. Lowe, let's be 91 00:04:43,049 --> 00:04:47,850 Stephen Koukoulas: transparent about that, was that the messaging wasn't great. Clearly 92 00:04:47,850 --> 00:04:50,430 Stephen Koukoulas: a brilliant economist and all the rest of it, but 93 00:04:50,430 --> 00:04:54,360 Stephen Koukoulas: the messaging on rates on hold or we going to lean 94 00:04:54,360 --> 00:04:58,469 Stephen Koukoulas: against house price inflation or that sort of discussion of 95 00:04:58,469 --> 00:05:01,289 Stephen Koukoulas: where the risks were on interest rates, the economy and 96 00:05:01,290 --> 00:05:04,589 Stephen Koukoulas: the like sort of got lost in poor communication skills, 97 00:05:04,589 --> 00:05:07,890 Stephen Koukoulas: whereas Michele Bullock and Andrew Hauser, they've got a bit 98 00:05:07,890 --> 00:05:10,621 Stephen Koukoulas: of a gift of the game, and that's a compliment. 99 00:05:10,621 --> 00:05:11,550 Sean Aylmer: Yeah. Yeah. 100 00:05:11,670 --> 00:05:15,450 Stephen Koukoulas: To be able to explain to everyone, myself included what 101 00:05:15,450 --> 00:05:18,540 Stephen Koukoulas: they're thinking and acknowledging, this is the other really important 102 00:05:18,540 --> 00:05:21,839 Stephen Koukoulas: part, not many central bankers do that. Acknowledging where they're 103 00:05:21,839 --> 00:05:25,650 Stephen Koukoulas: confused, acknowledging, look, we're not sure what's happening here. So 104 00:05:25,650 --> 00:05:31,169 Stephen Koukoulas: rather than being this authoritarian, smartypants central banker, which happens 105 00:05:31,170 --> 00:05:33,480 Stephen Koukoulas: a lot overseas in particular, they're sort of saying, look, 106 00:05:33,480 --> 00:05:36,329 Stephen Koukoulas: we just not sure quite how this inflation rate's going. 107 00:05:36,330 --> 00:05:38,790 Stephen Koukoulas: We're not quite sure whether we've done enough in terms 108 00:05:38,790 --> 00:05:41,459 Stephen Koukoulas: of tightening to get our inflation rate in a reasonable 109 00:05:41,459 --> 00:05:44,609 Stephen Koukoulas: timeframe. So I love it. I think it's really, really 110 00:05:44,610 --> 00:05:47,940 Stephen Koukoulas: refreshing and it does really just make it a little 111 00:05:47,940 --> 00:05:49,589 Stephen Koukoulas: easier to understand where the risks are. 112 00:05:50,160 --> 00:05:51,510 Sean Aylmer: Fair enough. Stephen, enjoy your week. 113 00:05:51,719 --> 00:05:52,620 Stephen Koukoulas: Will do. Thank you, Sean. 114 00:05:52,860 --> 00:05:55,200 Sean Aylmer: That was Economist Stephen Koukoulas, better known as The Kouk. 115 00:05:55,200 --> 00:05:57,539 Sean Aylmer: You can find him at thekouk. com and follow him 116 00:05:57,540 --> 00:06:00,209 Sean Aylmer: on X using the handle The Kouk. I'm Sean Aylmer 117 00:06:00,240 --> 00:06:02,099 Sean Aylmer: and this is FEAR & GREED- The Week Ahead.