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Speaker 1: Welcome to Fear and Greed the Week Ahead. I'm Suan Alma,

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Speaker 1: and as always I'm joined by economist Stephen Coculis. You'll

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Speaker 1: find here at the Cook dot com, t h E

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Speaker 1: k O UK, thecook dot com and on exit using

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Speaker 1: the handle the Kirk. Stephen.

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Speaker 2: Good morning and a big good morning to you. Sean.

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Speaker 1: Well, we're in the midst of plenty of things going on.

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Speaker 1: I'm not talking about the Spring racing carnival. I'm sure

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Speaker 1: you have turned your attention to that. Beyond that, last

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Speaker 1: week we had US Fed cutting rates. We had an

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Speaker 1: unemployment number which, kind of like unemployment numbers tend to

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Speaker 1: do these days, gave something for everyone. Where do we

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Speaker 1: stand as we start this new week.

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Speaker 2: Well, last week we had the US Federal Reserve cutting

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Speaker 2: interest rates by fifty basis points. I think the market

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Speaker 2: consensus was overwhelmingly that they'd only do twenty five. But

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Speaker 2: the Fed and chairpersons der own Power was sort of saying, look,

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Speaker 2: while the economy's still growing, it is slowing, while the

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Speaker 2: unemployment rate is still low, it is rising, and we

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Speaker 2: want to get ahead of any nahing news, ahead of

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Speaker 2: any recessionary talk. So they went the fifty. They signaled

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Speaker 2: there's more rate cuts to come, and yeah, well, we're

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Speaker 2: just now in this position to sort of judge the

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Speaker 2: US data on the inflation momentum and growth momentum and

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Speaker 2: unemployment rate to see when the next move in interest

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Speaker 2: rates is and how many rate cuts there are and

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Speaker 2: those sorts of things. But yep, the US has joined

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Speaker 2: the euro Zone, the UK, Canada, China. I've got to

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Speaker 2: do a rap about this. I think about how many

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Speaker 2: central banks are cutting interest rates.

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Speaker 1: No issues there in Australia though, we don't seem to

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Speaker 1: be very close to cutting interstrates at all. And we'll

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Speaker 1: find out well plenty this week with the Reserve Bank

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Speaker 1: Board meeting and inflation. But even last week's unemployment numbers

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Speaker 1: it kind of gave the reason Reserve Bank to do nothing.

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Speaker 2: Yeah, they were in the groove, as they say. The

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Speaker 2: employment number was solid, nice and solid. The unemployment rate

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Speaker 2: was steady at four point two percent, so it still

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Speaker 2: has ground up a bit from where we were a

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Speaker 2: year ago. Funnily, I think it's funny anyway that the

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Speaker 2: increase in the unemployment rate in Australia since the low

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Speaker 2: point about a year ago is the same as in

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Speaker 2: the US, US is worried about its labor market. We

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Speaker 2: probably aren't, but anyway, that's for another day. But yes,

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Speaker 2: the labor force numbers were actually pretty resilient. That in

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Speaker 2: a sense, our economy only growing at one percent in

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Speaker 2: annual terms that's from the GDP figures a few weeks ago,

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Speaker 2: is still creating jobs. It's a really interesting conundrum in

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Speaker 2: one respect. And yeah, while we want people to have jobs,

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Speaker 2: of course we do, it's also saying that productivity is

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Speaker 2: continuing to be pretty crappy. Because if we're getting all

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Speaker 2: these jobs being created and GDP is not very strong,

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Speaker 2: it means output per worker is still pretty ordinary as well.

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Speaker 2: And that's the sort of what we call it a

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Speaker 2: microeconomic policy issue for the government to tackle. But from

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Speaker 2: a macro perspective and an RBA perspective, they'll be content,

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Speaker 2: I think, to see those labor force numbers that we

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Speaker 2: saw last week.

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Speaker 1: And that's what you think they'll say this week when

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Speaker 1: the Michelle Blllock speak after the Reserving Board.

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Speaker 2: Many, yeah, the board meeting. I think there's no such

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Speaker 2: thing as a dead set certainty, but rates on hold, Gee,

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Speaker 2: you'd put almost your house on it at least a

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Speaker 2: monopoly house on it that they're not going to change

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Speaker 2: interest rates. And yes, it's one of those meetings where

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Speaker 2: it's what they say both in their for on Michell

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Speaker 2: Bullock's formal press release, but then of course the Q

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Speaker 2: and A when she's confronting the media. Look, they still

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Speaker 2: have to acknowledge in my view, that the economy is

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Speaker 2: slowing down, that the labor market is softening a bit.

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Speaker 2: Global conditions are important for Australia. Things like commodity prices

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Speaker 2: are down pretty significantly too, and that will have some

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Speaker 2: impact on Australia. But again I think she was probably

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Speaker 2: an end say on the other hand, well, we're in

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Speaker 2: no rush to cut rates. We want to be absolutely

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Speaker 2: certain that inflation's falling before we pull that trigger on

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Speaker 2: a right cut.

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Speaker 1: What about inflation. We'll get monthly data this week.

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Speaker 2: On Wednesday we get the monthly inflation numbers and the

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Speaker 2: very good focus at west Pack and CBA the others.

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Speaker 2: But I've seen the Westpac and CBA economics departments and

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Speaker 2: their work. They are both forecasting annual inflation to fall

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Speaker 2: to drum roll, two point seven percent? Who point seven percent? Now,

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Speaker 2: before we get too excited, now I'm a little bit

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Speaker 2: excited by that because it's the first time in a

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Speaker 2: long time that headline inflation has been within the target.

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Speaker 2: The reason for that sharp drop back in the rate

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Speaker 2: of annual inflation is these electricity subsidies that we're all

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Speaker 2: enjoying as households. They're seventy five dollars a quarter that

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Speaker 2: the govern announced in the budget back in mate. It's

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Speaker 2: now starting to hit our electricity bills and that's going

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Speaker 2: to cut electricity prices by approximately fifteen or sixteen percent.

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Speaker 2: Given the waiting of electricity in the inflation basket, that

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Speaker 2: trims off about point four point five off your monthly

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Speaker 2: inflation rate, and therefore you get this big drop in

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Speaker 2: the annual inflation from what was three point five percent

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Speaker 2: in you lie down to about two point seven. So

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Speaker 2: all eyes on that inflation number. Some of us will

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Speaker 2: be excited that there's inflation back in the target range

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Speaker 2: and we're going to have an increase in real wages

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Speaker 2: and that's a good thing. Others will say, ignore that.

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Speaker 2: Look at the trimmed mean take out these volatile items

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Speaker 2: or the ones that are influenced by government policy, because

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Speaker 2: they're not influenced by the RBA interest rate settings. I

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Speaker 2: think the truth somewhere between those two.

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Speaker 1: Ah, you economists, you are dismol you know, just when

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Speaker 1: there's good news, there's bad news. It's always seems to

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Speaker 1: me that way.

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Speaker 2: Always the way. Look, I'm welcoming the fact that we've

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Speaker 2: got inflation down. And yeah, well in the past some

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Speaker 2: of the inflation increases been due to tobacco excise increases

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Speaker 2: and the world price going up. Let's just celebrate this

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Speaker 2: one number. If it doesn't that come in within the

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Speaker 2: RBA target, that's my view. I'm going to have a

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Speaker 2: I'll have a glass of champagne. If we have a

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Speaker 2: two point something inflation rate.

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Speaker 1: Well, you've convinced me. I'll do it as well. Steven,

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Speaker 1: enjoy the week.

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Speaker 2: Thank you mate.

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Speaker 1: That was economist Stephen cookula Spender, known as the Kook.

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Speaker 1: You can find him at the cook dot com and

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Speaker 1: follow him on x using the handle of the Kook.

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Speaker 1: I'm Sean Almer, and this is fearing greed, the weak

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Speaker 1: ahead