1
00:00:05,800 --> 00:00:06,960
Speaker 1: Cooogie, welcome back, mate.

2
00:00:07,760 --> 00:00:12,000
Speaker 2: We're still shocked after the last board meeting that they

3
00:00:12,119 --> 00:00:12,920
Speaker 2: didn't move rates.

4
00:00:13,320 --> 00:00:14,360
Speaker 1: How do you feel about that one?

5
00:00:14,520 --> 00:00:16,400
Speaker 3: You, me and a lot of people I speak to

6
00:00:16,440 --> 00:00:22,160
Speaker 3: on that afternoon on a month ago, got that no change.

7
00:00:22,520 --> 00:00:25,200
Speaker 3: I had to refresh my page because this three point

8
00:00:25,200 --> 00:00:28,960
Speaker 3: eighty five cash trait didn't change, and so I had

9
00:00:28,960 --> 00:00:31,840
Speaker 3: a lot of wtfs coming through on my text line.

10
00:00:32,920 --> 00:00:37,040
Speaker 3: But look when you look back at what they said,

11
00:00:37,200 --> 00:00:40,240
Speaker 3: the logic what the governor said at her press conference,

12
00:00:40,240 --> 00:00:44,760
Speaker 3: Michelle Bullock said after the no change, you can see

13
00:00:45,159 --> 00:00:48,000
Speaker 3: that they are not or they weren't. Remember this is

14
00:00:48,040 --> 00:00:50,839
Speaker 3: still four odd weeks ago. Five weeks ago, they weren't

15
00:00:50,920 --> 00:00:55,080
Speaker 3: yet convinced that inflation was entrenched at two and a

16
00:00:55,120 --> 00:00:55,600
Speaker 3: half percent.

17
00:00:55,640 --> 00:00:57,360
Speaker 1: So let's just say what was?

18
00:00:57,120 --> 00:00:57,440
Speaker 3: What was?

19
00:00:57,480 --> 00:01:00,560
Speaker 1: It didn't convince it though, So it is?

20
00:01:00,560 --> 00:01:00,800
Speaker 3: Is it?

21
00:01:00,800 --> 00:01:03,120
Speaker 1: The monthly numbers are always because it's a monthly number.

22
00:01:03,200 --> 00:01:06,400
Speaker 3: The monthly number is not comprehensive as the quarterly number.

23
00:01:06,560 --> 00:01:08,280
Speaker 3: We want to see the gen Courter number, which by

24
00:01:08,280 --> 00:01:09,720
Speaker 3: the ways, come out I'm sure we'll talk about in

25
00:01:09,720 --> 00:01:13,520
Speaker 3: the minute. And the unemployment rate was still four point one. Again,

26
00:01:13,600 --> 00:01:17,320
Speaker 3: that number came out subsequently, and they were still hearing

27
00:01:17,360 --> 00:01:21,959
Speaker 3: from their business liaison, a really important part of their deliberations.

28
00:01:21,959 --> 00:01:27,960
Speaker 3: Obviously they rely on data, hard data on inflation, unemployment anyway, Yes,

29
00:01:28,000 --> 00:01:31,280
Speaker 3: today's liaison is tomorrow's data. You've got a big business saying, well,

30
00:01:31,280 --> 00:01:33,440
Speaker 3: what are you finding. They were still hearing that there

31
00:01:33,480 --> 00:01:39,639
Speaker 3: are labor shortages in some sectors of the economy instruction, yes,

32
00:01:39,840 --> 00:01:44,440
Speaker 3: and there was some evidence that the economy and price

33
00:01:44,560 --> 00:01:48,000
Speaker 3: pressures were lingering. They've clearly come down, but they were

34
00:01:48,000 --> 00:01:49,680
Speaker 3: still England. So they sort of thought, or the RBA

35
00:01:49,760 --> 00:01:54,160
Speaker 3: governor and the board importantly thought, look if we wait

36
00:01:54,200 --> 00:01:56,520
Speaker 3: six weeks, so what for the economy? It doesn't matter

37
00:01:56,560 --> 00:01:57,720
Speaker 3: that much waiting six weeks?

38
00:01:57,800 --> 00:02:00,600
Speaker 1: Or does it? What do you think? What abouty think

39
00:02:00,600 --> 00:02:01,560
Speaker 1: about it? What do you think?

40
00:02:01,600 --> 00:02:03,520
Speaker 2: I mean? This is a bit more political, I guess,

41
00:02:03,600 --> 00:02:05,639
Speaker 2: or a little bit different to what This is different

42
00:02:05,680 --> 00:02:08,360
Speaker 2: to what economics would normally say but will be interested in.

43
00:02:08,440 --> 00:02:13,400
Speaker 2: But Australians sitting there hanging out for a rate reduction.

44
00:02:13,639 --> 00:02:17,799
Speaker 1: Yep, yeah, it's a bit more What do you think?

45
00:02:17,960 --> 00:02:22,200
Speaker 3: Yeah? Look, I think it in a sense, I think

46
00:02:22,200 --> 00:02:26,600
Speaker 3: it does matter. You want to get that policy positivity

47
00:02:27,600 --> 00:02:32,120
Speaker 3: out there when you know that the economy is only muddling.

48
00:02:32,160 --> 00:02:34,560
Speaker 3: You know that we get a GDP number in about

49
00:02:34,600 --> 00:02:36,480
Speaker 3: three weeks time, and it's probably going to show in

50
00:02:37,400 --> 00:02:40,200
Speaker 3: bottom of my GDP at about one and a half percent.

51
00:02:40,240 --> 00:02:44,680
Speaker 3: So the economy is not that strong, and one of

52
00:02:44,680 --> 00:02:48,880
Speaker 3: the reasons is that we don't have any monetary policy.

53
00:02:49,120 --> 00:02:52,800
Speaker 3: Stimulus is still restrictive. So waiting six weeks, it's another

54
00:02:52,840 --> 00:02:54,919
Speaker 3: six weeks where the business sector think, oh god, you

55
00:02:55,000 --> 00:02:56,920
Speaker 3: know we're not going to I'm not getting many customers

56
00:02:56,919 --> 00:02:58,600
Speaker 3: in my door. It's another six weeks of the mortgage

57
00:02:58,600 --> 00:03:01,600
Speaker 3: holders saying, oh gee, so it's longer until I say

58
00:03:01,639 --> 00:03:03,799
Speaker 3: that extra one hundred bucks a month or whatever that

59
00:03:04,040 --> 00:03:07,440
Speaker 3: repayment relief is going to be. So it sort of

60
00:03:07,480 --> 00:03:09,960
Speaker 3: does matter. But from the RBA's perspective, they think, well,

61
00:03:10,160 --> 00:03:12,440
Speaker 3: it doesn't matter, and if I'm not saying this is

62
00:03:12,440 --> 00:03:15,200
Speaker 3: the case now, but if they do find out they're wrong,

63
00:03:15,320 --> 00:03:17,600
Speaker 3: they can slam on a fifty point cut. As we

64
00:03:17,680 --> 00:03:20,600
Speaker 3: saw with the rate hikes back in twenty twenty three,

65
00:03:20,639 --> 00:03:22,880
Speaker 3: there are a number of fifty point hikes when they

66
00:03:22,919 --> 00:03:25,000
Speaker 3: realized they were a little bit behind. If you think

67
00:03:25,040 --> 00:03:28,040
Speaker 3: back then, and yeah, during the global financial crisis are

68
00:03:28,040 --> 00:03:29,920
Speaker 3: a couple of one hundred point rate cuts when they realise,

69
00:03:30,000 --> 00:03:32,600
Speaker 3: holy smokes, this is blowing up. So they can do

70
00:03:32,639 --> 00:03:35,240
Speaker 3: fifty seventy five hundred based points if they needed SA

71
00:03:35,320 --> 00:03:38,280
Speaker 3: for them, Yeah, waiting six weeks, but it sort of

72
00:03:38,320 --> 00:03:40,520
Speaker 3: does matter a bit, you know, I want to kind

73
00:03:40,560 --> 00:03:43,520
Speaker 3: of get my sugar hit now putting it off.

74
00:03:43,600 --> 00:03:47,080
Speaker 2: I get, I'm not know, I get I get a

75
00:03:47,080 --> 00:03:52,440
Speaker 2: little bit concerned about that attitude because it's sort of

76
00:03:52,560 --> 00:03:55,360
Speaker 2: playing God a bit, you know, you know it's I know,

77
00:03:55,480 --> 00:03:56,320
Speaker 2: it's not you.

78
00:03:56,880 --> 00:03:57,280
Speaker 1: They're not.

79
00:03:57,440 --> 00:04:00,320
Speaker 2: They would always deny that position, but there are some

80
00:04:00,360 --> 00:04:01,840
Speaker 2: poor buggers out there who made it.

81
00:04:02,000 --> 00:04:04,280
Speaker 1: Just please give me a rate reduction. And then, by

82
00:04:04,280 --> 00:04:06,640
Speaker 1: the way, they just want the news of a rate reduction.

83
00:04:06,800 --> 00:04:08,360
Speaker 2: They're not going to get it for a couple of months,

84
00:04:08,560 --> 00:04:11,200
Speaker 2: but it takes that time to wash through the system,

85
00:04:11,600 --> 00:04:12,840
Speaker 2: but they're dying for it.

86
00:04:12,840 --> 00:04:13,480
Speaker 1: Then they're desperate.

87
00:04:13,480 --> 00:04:14,840
Speaker 2: And then there might only be two percent of the

88
00:04:14,840 --> 00:04:17,080
Speaker 2: title economy or two percent of all borrows.

89
00:04:17,120 --> 00:04:19,200
Speaker 1: It doesn't make any difference. There are people out there

90
00:04:19,240 --> 00:04:21,760
Speaker 1: who need it, who need to hear this good news.

91
00:04:21,880 --> 00:04:24,320
Speaker 3: And they need to hear it one to improve their

92
00:04:24,560 --> 00:04:27,279
Speaker 3: personal financial position, which of course is really important. But

93
00:04:27,400 --> 00:04:30,679
Speaker 3: also then for the as you said, there's a lag

94
00:04:30,760 --> 00:04:33,240
Speaker 3: between the effect of the rate cut today if we

95
00:04:33,320 --> 00:04:36,280
Speaker 3: got one and then it's passed on, and then you

96
00:04:36,360 --> 00:04:38,520
Speaker 3: realize in your bank statement, and then you realize, oh shit,

97
00:04:38,560 --> 00:04:40,920
Speaker 3: I'm saving one hundred bucks a month. Oh, and then

98
00:04:40,960 --> 00:04:42,880
Speaker 3: I can go and afford to spend fifty bucks a months.

99
00:04:43,080 --> 00:04:46,120
Speaker 3: So you get the economy being stimulated. That lag, we'll

100
00:04:46,160 --> 00:04:48,599
Speaker 3: just sleep at night is three to six months, or

101
00:04:48,680 --> 00:04:51,000
Speaker 3: just say, oh, thank goodness, I can you know my

102
00:04:51,120 --> 00:04:54,440
Speaker 3: repayments have gone more affordable. Yeah, And the business person,

103
00:04:54,480 --> 00:04:57,200
Speaker 3: the business owner with an overdraft is saying, well, I've

104
00:04:57,240 --> 00:04:59,520
Speaker 3: saved a few bucks. I thank goodness for that. I

105
00:04:59,560 --> 00:05:01,080
Speaker 3: can quite a few minutes.

106
00:05:01,240 --> 00:05:03,919
Speaker 2: I can now buy one coffee a week. Yes, have

107
00:05:03,960 --> 00:05:05,360
Speaker 2: to make a percolay one hand.

108
00:05:05,520 --> 00:05:08,600
Speaker 3: And that's this ho issue about how much. By the way, mark,

109
00:05:08,720 --> 00:05:11,520
Speaker 3: that's how interestrates work. When they're going up, they're sort

110
00:05:11,520 --> 00:05:14,240
Speaker 3: of taking money out of our pockets, putting into the

111
00:05:14,240 --> 00:05:16,760
Speaker 3: pockets of savers through deposit rates going up, and the

112
00:05:16,760 --> 00:05:18,360
Speaker 3: economy slows down, inflation comes down.

113
00:05:18,400 --> 00:05:21,120
Speaker 2: Well, ask you this around. We have rate cuts, what

114
00:05:21,240 --> 00:05:25,400
Speaker 2: a myste during the rate rise period. You mentioned there

115
00:05:25,440 --> 00:05:28,120
Speaker 2: was a couple of fifties a fifty basis point rate

116
00:05:28,200 --> 00:05:31,960
Speaker 2: rises during the rate reduction period and they had no

117
00:05:32,000 --> 00:05:33,240
Speaker 2: compunction whatsoever doing that.

118
00:05:33,520 --> 00:05:36,440
Speaker 3: Oh yes, they just slammed it on and the market said, yep,

119
00:05:36,480 --> 00:05:36,800
Speaker 3: go for.

120
00:05:36,760 --> 00:05:38,560
Speaker 1: It, and we must save this joint.

121
00:05:38,839 --> 00:05:41,599
Speaker 3: So I'm going to Inflation was, as we remember, going

122
00:05:41,600 --> 00:05:44,640
Speaker 3: from one percent to three to five to seven percent.

123
00:05:44,839 --> 00:05:48,680
Speaker 2: Now let's talk about well, maybe you could give us

124
00:05:48,680 --> 00:05:51,320
Speaker 2: a bit of insight. It's the personality of the RBA.

125
00:05:51,640 --> 00:05:55,159
Speaker 2: They made the decision of about their personality. We don't

126
00:05:56,000 --> 00:05:58,880
Speaker 2: you know, Jim Chalmers doesn't although where he does appoint

127
00:05:58,880 --> 00:06:02,479
Speaker 2: everybody but day and the end of the day made

128
00:06:02,480 --> 00:06:04,600
Speaker 2: their own that we're going to give you the personality

129
00:06:04,640 --> 00:06:08,640
Speaker 2: and the previously Glenn Stephens, previous RBA governors have been

130
00:06:08,680 --> 00:06:12,000
Speaker 2: what they call preemptive or much more preemptive in their

131
00:06:12,000 --> 00:06:16,200
Speaker 2: decision making. Maybe not the governor himself, but the board.

132
00:06:17,040 --> 00:06:19,640
Speaker 2: And we do know it's been disclosed for the first time.

133
00:06:19,720 --> 00:06:21,520
Speaker 2: The vote was six to three, six a favor of

134
00:06:21,600 --> 00:06:22,040
Speaker 2: doing nothing.

135
00:06:22,120 --> 00:06:22,400
Speaker 1: Three.

136
00:06:23,080 --> 00:06:24,400
Speaker 2: We don't know whether they want to say they want

137
00:06:24,400 --> 00:06:26,200
Speaker 2: to put them up or down, but I'm assuming they're

138
00:06:26,240 --> 00:06:29,400
Speaker 2: going to say down, and we don't know which members

139
00:06:29,400 --> 00:06:33,040
Speaker 2: they were either, which great, that's interesting, But maybe you

140
00:06:33,080 --> 00:06:37,440
Speaker 2: could just talk about the personality of the Reserve Bank now.

141
00:06:37,600 --> 00:06:41,680
Speaker 3: Yeah, the Reserve Bank now with Michelle Bulloker's governor Andrew

142
00:06:41,760 --> 00:06:45,520
Speaker 3: Houser recently appointed as Deputy Government recently eighteen months ago,

143
00:06:45,680 --> 00:06:48,760
Speaker 3: two years ago thereabouts. The other makeup of the board

144
00:06:48,920 --> 00:06:51,520
Speaker 3: is the Monetary Policy Board, which is made up of

145
00:06:51,640 --> 00:06:56,960
Speaker 3: a number of academics ex bankers, a couple of economists,

146
00:06:57,080 --> 00:07:00,200
Speaker 3: and a couple of people who are labor mark at

147
00:07:00,279 --> 00:07:03,000
Speaker 3: l a b O. You are union type people who

148
00:07:03,120 --> 00:07:06,440
Speaker 3: talk about wage pressures and labor market reform. So it's

149
00:07:06,680 --> 00:07:09,960
Speaker 3: a it's not a bad composition. And they sit down

150
00:07:10,280 --> 00:07:15,480
Speaker 3: with the research and analysis of the RBA and of

151
00:07:15,520 --> 00:07:18,400
Speaker 3: course look at the data of the bureaucrats, of the bureaucats,

152
00:07:18,560 --> 00:07:22,040
Speaker 3: the hundreds of economists working in the art literary hundreds, yes,

153
00:07:22,320 --> 00:07:23,960
Speaker 3: and say well, this is the this is these are

154
00:07:24,000 --> 00:07:25,560
Speaker 3: the pressures that we're seeing.

155
00:07:26,000 --> 00:07:27,680
Speaker 1: They make a recommendation of these teams.

156
00:07:27,720 --> 00:07:31,400
Speaker 3: They still do make a recommendation, and that is debated

157
00:07:31,560 --> 00:07:34,520
Speaker 3: around the RBA board table. You know, I agree, I disagree,

158
00:07:34,560 --> 00:07:36,640
Speaker 3: what about this? And you know, it's a fullsome discussion.

159
00:07:36,640 --> 00:07:37,240
Speaker 3: I think that's great.

160
00:07:37,320 --> 00:07:39,000
Speaker 1: It's now two days correct.

161
00:07:39,400 --> 00:07:42,040
Speaker 3: Day one is a theoretical discussion. What are we seeing

162
00:07:42,080 --> 00:07:45,480
Speaker 3: and more what we might call economic wonk, you know,

163
00:07:46,400 --> 00:07:48,800
Speaker 3: data and modeling and all that stuff. Day two I

164
00:07:48,800 --> 00:07:50,160
Speaker 3: think to well, what the hell do we do do

165
00:07:50,360 --> 00:07:52,240
Speaker 3: Ken Steady, put them up, put them down, all that

166
00:07:52,280 --> 00:07:54,320
Speaker 3: sort of stuff. Back in the day, and you mentioned

167
00:07:54,320 --> 00:07:58,120
Speaker 3: Glenn Stevens who was governor Gosh a decade or more ago.

168
00:07:59,280 --> 00:08:04,000
Speaker 3: He was the master at preemptiveness. And by that I

169
00:08:04,120 --> 00:08:06,080
Speaker 3: mean he would sort of see the data, of course,

170
00:08:06,120 --> 00:08:10,280
Speaker 3: on the economy as evolved, unemployment, wages, inflation and all

171
00:08:10,320 --> 00:08:13,440
Speaker 3: that stuff. But then he was also looking forward, not

172
00:08:13,480 --> 00:08:17,240
Speaker 3: necessarily wedded to an economic model, but when he saw

173
00:08:18,040 --> 00:08:20,480
Speaker 3: I'm looking overseas and I can see the Chinese economy

174
00:08:20,520 --> 00:08:22,679
Speaker 3: is a bit weak, you know, the tariff war. While

175
00:08:22,840 --> 00:08:25,520
Speaker 3: markets are still very buoyant, you know, stock markets are strong,

176
00:08:26,080 --> 00:08:28,040
Speaker 3: it's not going to be good years. And I think

177
00:08:28,080 --> 00:08:30,960
Speaker 3: I've got enough evidence from the hard data. Plus when

178
00:08:30,960 --> 00:08:34,400
Speaker 3: I look through the windscreen rather than the review, I

179
00:08:34,400 --> 00:08:36,280
Speaker 3: can see some problems. So I'm going to trim twenty five,

180
00:08:37,040 --> 00:08:40,680
Speaker 3: even though inflation is still three point zero, because I

181
00:08:40,720 --> 00:08:44,600
Speaker 3: know the pressures are coming down current RBA board and

182
00:08:44,640 --> 00:08:47,840
Speaker 3: the RBA staff, you know, the people who work at

183
00:08:47,840 --> 00:08:51,000
Speaker 3: the RBA. More Well, here's the hard data. Yes they

184
00:08:51,000 --> 00:08:52,760
Speaker 3: have models, Yes they have tried to be preemptive and

185
00:08:52,800 --> 00:08:54,559
Speaker 3: all the rest of it. But I think they are

186
00:08:54,600 --> 00:08:58,360
Speaker 3: more dependent. I think the dependency parameter is more on

187
00:08:58,400 --> 00:09:02,680
Speaker 3: the hard data. We get inflation comfortably at two and

188
00:09:02,679 --> 00:09:06,200
Speaker 3: a half, and until we see unemployment spiking high, will

189
00:09:06,240 --> 00:09:08,720
Speaker 3: be really cautious with our rate cutting cycle. Put it

190
00:09:08,720 --> 00:09:11,600
Speaker 3: this way, I reckon in the olden days. I can't

191
00:09:11,640 --> 00:09:14,079
Speaker 3: prove this, of course, but if Glenn Stephen was governor,

192
00:09:14,440 --> 00:09:16,520
Speaker 3: rates would have been cut. You know, he would have said,

193
00:09:16,520 --> 00:09:19,280
Speaker 3: look inflation, because back then was two point nine on

194
00:09:19,320 --> 00:09:21,080
Speaker 3: the trimm to me and unemployment was four point nine.

195
00:09:21,120 --> 00:09:24,520
Speaker 3: But I can see some headwinds coming domestically internationally, I'll

196
00:09:24,520 --> 00:09:27,160
Speaker 3: cut them. I won't say that there's going to be

197
00:09:27,200 --> 00:09:28,720
Speaker 3: more to come, but I'll cut them now because I

198
00:09:28,760 --> 00:09:31,800
Speaker 3: need to now. And then that pre empts the economy

199
00:09:32,080 --> 00:09:32,960
Speaker 3: in twenty twenty six.

200
00:09:33,160 --> 00:09:37,240
Speaker 2: So there's nothing in the mandate or in any guidelines

201
00:09:37,280 --> 00:09:40,679
Speaker 2: which tells the RBA what type of personality to have

202
00:09:41,960 --> 00:09:46,559
Speaker 2: they choose their personality, and we would call the current

203
00:09:46,679 --> 00:09:50,280
Speaker 2: RBA therefore more hawkish on data.

204
00:09:49,920 --> 00:09:53,160
Speaker 3: More hawkish on data, and more reactive to news. You know, Mark,

205
00:09:53,200 --> 00:09:54,840
Speaker 3: you and I have been around the block of.

206
00:09:55,280 --> 00:09:57,120
Speaker 1: A thousand times way too long.

207
00:09:58,280 --> 00:10:01,360
Speaker 3: But that means and how many times of we and

208
00:10:01,440 --> 00:10:03,040
Speaker 3: all of our mates in markets and all the other

209
00:10:03,040 --> 00:10:05,360
Speaker 3: economics being surprised by economic.

210
00:10:05,040 --> 00:10:07,760
Speaker 4: Dobs and by the way we closed and they say

211
00:10:07,800 --> 00:10:10,079
Speaker 4: we got it wrong. Yes, I thought the other point

212
00:10:10,160 --> 00:10:11,839
Speaker 4: rate would four point one. Oh god, it came out

213
00:10:11,840 --> 00:10:14,240
Speaker 4: four point three. I thought GDP would be point two.

214
00:10:14,280 --> 00:10:16,640
Speaker 4: Oh it's coming at minus point two. Yeah, we get

215
00:10:16,920 --> 00:10:19,640
Speaker 4: our employment plus twenty thousand, oh minus ten thousands. There

216
00:10:19,640 --> 00:10:23,120
Speaker 4: are data surprises, and that's not and that's not just

217
00:10:23,200 --> 00:10:25,360
Speaker 4: you and me, And I'm not throwing stones at any

218
00:10:25,360 --> 00:10:28,240
Speaker 4: of my economist mates out there, but we don't have

219
00:10:29,080 --> 00:10:32,160
Speaker 4: We aren't able to forecast that monthly those monthly numbers

220
00:10:32,240 --> 00:10:35,360
Speaker 4: very well. And so what that means, of course, is

221
00:10:35,400 --> 00:10:40,640
Speaker 4: that we get these numbers, these surprises, and those surprises

222
00:10:40,640 --> 00:10:43,560
Speaker 4: can even be in the form of a pandemic coming

223
00:10:43,559 --> 00:10:48,800
Speaker 4: along or you think up, I remember three months before

224
00:10:48,960 --> 00:10:52,880
Speaker 4: Lehman Brothers claps in the globe huge. I think the

225
00:10:52,880 --> 00:10:54,400
Speaker 4: cash right was seven point y.

226
00:10:54,840 --> 00:10:57,040
Speaker 1: I remember landing race was nearly just underno.

227
00:10:57,320 --> 00:10:59,960
Speaker 3: Yes, and I think that was appropriate because we had

228
00:11:00,000 --> 00:11:03,080
Speaker 3: the mining boom, inflation was high, all this other stuff.

229
00:11:04,720 --> 00:11:07,520
Speaker 3: But then along came this shock, Along came the pandemic,

230
00:11:07,559 --> 00:11:11,080
Speaker 3: Along came Trump tariffs. Yeah, stuff happens all the time.

231
00:11:11,240 --> 00:11:14,200
Speaker 3: That did I say, geopolitical conflict in Middle East? And

232
00:11:14,559 --> 00:11:16,920
Speaker 3: even though oil price is still pretty low, but there's

233
00:11:16,920 --> 00:11:19,720
Speaker 3: all this stuff going on China, Taiwan and the US,

234
00:11:19,760 --> 00:11:21,760
Speaker 3: what's going to happen there? I don't know. I wouldn't

235
00:11:21,760 --> 00:11:23,760
Speaker 3: be surprised to be woke up one morning and something's

236
00:11:23,840 --> 00:11:26,480
Speaker 3: escalated that's caused the markets and the economy to change,

237
00:11:26,600 --> 00:11:29,600
Speaker 3: or you know, they can be a natural disaster. You know,

238
00:11:29,880 --> 00:11:32,360
Speaker 3: there's earthquakes in New York at the moment now they're

239
00:11:32,400 --> 00:11:36,200
Speaker 3: only low, but imagine a serious earthquake in New York

240
00:11:36,280 --> 00:11:40,520
Speaker 3: or California or in Japan. You know that changes markets.

241
00:11:40,240 --> 00:11:42,680
Speaker 1: Or a plane crashing into the correct all.

242
00:11:42,520 --> 00:11:46,080
Speaker 3: That stuff that how you can't forecast, it's impossible. So

243
00:11:46,559 --> 00:11:49,240
Speaker 3: it's just that it does impact on what you you

244
00:11:49,400 --> 00:11:52,880
Speaker 3: the RBA do. When you get that fresh US you

245
00:11:52,920 --> 00:11:54,600
Speaker 3: might think, Gee, I thought we were going to have

246
00:11:54,800 --> 00:11:58,840
Speaker 3: this problem, but the world has changed in an unexpected way,

247
00:11:58,920 --> 00:12:00,720
Speaker 3: and therefore we have to react to the news that

248
00:12:00,760 --> 00:12:01,200
Speaker 3: comes out.

249
00:12:01,320 --> 00:12:04,640
Speaker 2: So what do you think about I mean, and I

250
00:12:04,679 --> 00:12:07,520
Speaker 2: know our listeners maybe have their own opinions on this,

251
00:12:07,600 --> 00:12:10,480
Speaker 2: but I'd be interested to hear, especially someone like you

252
00:12:10,520 --> 00:12:14,600
Speaker 2: who's had close ties to political figures in the past,

253
00:12:16,000 --> 00:12:20,439
Speaker 2: what do you think about not having a preemptive mindset

254
00:12:21,200 --> 00:12:26,440
Speaker 2: relative to not being prepared for shocks, So, you know,

255
00:12:26,520 --> 00:12:29,520
Speaker 2: like shocks to the system. So let's say, for example,

256
00:12:31,760 --> 00:12:34,320
Speaker 2: we've all got it wrong, including the RBA, and actually

257
00:12:34,400 --> 00:12:36,920
Speaker 2: we're heading towards a really high unemployment number for the

258
00:12:36,960 --> 00:12:39,280
Speaker 2: next big number that comes out, a really crappy DUDP

259
00:12:39,440 --> 00:12:41,640
Speaker 2: number for the next summer comes out, and a really

260
00:12:41,679 --> 00:12:43,559
Speaker 2: good inflation number for the next time when that comes out,

261
00:12:43,559 --> 00:12:45,040
Speaker 2: and all of a sudden, people have been suffering the

262
00:12:45,040 --> 00:12:50,080
Speaker 2: whole long along the way, and our RBA hasn't been

263
00:12:50,120 --> 00:12:54,040
Speaker 2: reactive enough quick enough, like on eight August, on eight July,

264
00:12:54,080 --> 00:12:57,080
Speaker 2: I should say and reduce rates. I mean, and I

265
00:12:57,160 --> 00:12:59,679
Speaker 2: know the response from them would be so it's only

266
00:12:59,679 --> 00:13:02,480
Speaker 2: one man, but still one month can put something.

267
00:13:02,679 --> 00:13:04,679
Speaker 1: It can put someone into bankruptcy.

268
00:13:05,320 --> 00:13:07,400
Speaker 3: But that's when they go fifty. That's when they say.

269
00:13:07,280 --> 00:13:08,800
Speaker 1: They're too late because someone's going to be bank.

270
00:13:09,800 --> 00:13:12,880
Speaker 3: Yes, the problems have already occurred.

271
00:13:12,840 --> 00:13:14,120
Speaker 1: Or the bank's moves this old house.

272
00:13:14,520 --> 00:13:17,000
Speaker 3: So yes, rather than you having that relief of the

273
00:13:17,240 --> 00:13:19,400
Speaker 3: I can keep my head above water just for this

274
00:13:19,520 --> 00:13:22,080
Speaker 3: extra couple of months. Another right cut comes. I'm sort

275
00:13:22,080 --> 00:13:25,800
Speaker 3: of okay. My business picks up a bit. I survived

276
00:13:25,840 --> 00:13:28,040
Speaker 3: that terrible position in.

277
00:13:27,960 --> 00:13:31,280
Speaker 2: The lot for job, and getting a new job is

278
00:13:31,320 --> 00:13:32,920
Speaker 2: really hard. Yes, because I'm.

279
00:13:33,600 --> 00:13:34,200
Speaker 3: Plumps going up.

280
00:13:34,440 --> 00:13:34,960
Speaker 1: I'm easy.

281
00:13:35,320 --> 00:13:38,560
Speaker 3: Yeah, yeah, you know. And I used to work at

282
00:13:39,000 --> 00:13:42,160
Speaker 3: General Motives in Geelong, you know what I mean. And

283
00:13:42,240 --> 00:13:43,920
Speaker 3: this is the other thing about that, just by the pie,

284
00:13:44,040 --> 00:13:46,920
Speaker 3: I know a lot of a lot of my mates,

285
00:13:46,960 --> 00:13:49,200
Speaker 3: a lot of economiss makes. I don't think they've published

286
00:13:49,200 --> 00:13:55,040
Speaker 3: it yet. Having some sort of AI Reserve Bank board approach,

287
00:13:55,320 --> 00:13:58,280
Speaker 3: so they're pretending that the board is just artificial intelligence.

288
00:13:59,000 --> 00:14:02,800
Speaker 3: What would the Reserve Bank do with these facts? And

289
00:14:03,720 --> 00:14:06,040
Speaker 3: in a funny way, by definition, that's going to be

290
00:14:06,120 --> 00:14:09,240
Speaker 3: reactive because it relies on the history on all the

291
00:14:09,280 --> 00:14:12,600
Speaker 3: economic indicators, and so can we have the RBA board

292
00:14:12,640 --> 00:14:15,400
Speaker 3: replaced by artificial intelligence.

293
00:14:15,440 --> 00:14:15,880
Speaker 1: I've tried them.

294
00:14:15,880 --> 00:14:17,719
Speaker 3: By the way, I've tried it as well, but I

295
00:14:17,760 --> 00:14:19,680
Speaker 3: haven't done it. Some people have gone into a huge

296
00:14:19,800 --> 00:14:24,320
Speaker 3: degree in detail to really specify what you want the

297
00:14:24,440 --> 00:14:26,760
Speaker 3: AI to spit out back at you.

298
00:14:27,640 --> 00:14:29,320
Speaker 1: But you can't ask to be premptive or.

299
00:14:30,120 --> 00:14:33,360
Speaker 3: What should they do today based on economic news. And yes,

300
00:14:33,400 --> 00:14:35,400
Speaker 3: I've seen people sort of frame the question differently, they

301
00:14:35,400 --> 00:14:36,120
Speaker 3: get different results.

302
00:14:36,360 --> 00:14:39,640
Speaker 2: I'll try it, and I found an hallucinated a little bit,

303
00:14:39,680 --> 00:14:40,280
Speaker 2: to be honest with you.

304
00:14:40,440 --> 00:14:45,920
Speaker 3: Yes, yeah, however, that's why, yeah, we need an RBA

305
00:14:46,000 --> 00:14:50,200
Speaker 3: board with humans. Heaven forbid. I'm not suggesting it for

306
00:14:50,200 --> 00:14:52,880
Speaker 3: one second that we need to run monetary policy, because

307
00:14:52,880 --> 00:14:55,960
Speaker 3: you do need that human touch and you do need that.

308
00:14:56,640 --> 00:14:58,000
Speaker 3: You know, data is there. We all look at the

309
00:14:58,000 --> 00:15:00,960
Speaker 3: same data, but we can interpret it differently. And that's

310
00:15:01,040 --> 00:15:03,040
Speaker 3: not and there isn't skill to that or an art

311
00:15:03,080 --> 00:15:05,000
Speaker 3: to it that you sort of see that unemployment number

312
00:15:05,040 --> 00:15:07,400
Speaker 3: and the job vacancy is coming down, and you see

313
00:15:07,440 --> 00:15:11,160
Speaker 3: the retail sales being soggy, and you look in your

314
00:15:11,160 --> 00:15:12,320
Speaker 3: former judgment about.

315
00:15:12,160 --> 00:15:14,480
Speaker 2: How these face on what we've seen before, though correct,

316
00:15:14,480 --> 00:15:16,360
Speaker 2: and when we've seen it before, we've.

317
00:15:16,120 --> 00:15:19,800
Speaker 3: Been worried just being no problem at all, so correct,

318
00:15:19,960 --> 00:15:25,160
Speaker 3: exactly right, Mark. So that sort of experience, I suppose

319
00:15:25,200 --> 00:15:28,240
Speaker 3: you could call it that nuance in sort of you know,

320
00:15:28,240 --> 00:15:31,000
Speaker 3: it's like like driving a car. You know, you can

321
00:15:31,080 --> 00:15:33,040
Speaker 3: anticipate things a bit and you can see, oh god,

322
00:15:33,040 --> 00:15:34,760
Speaker 3: that guy is running. I've been to pull off and

323
00:15:34,840 --> 00:15:38,200
Speaker 3: let that stupid clown overtake me, or you know, if

324
00:15:38,200 --> 00:15:40,760
Speaker 3: you're a brand new driver, I think what's going on here?

325
00:15:40,760 --> 00:15:43,120
Speaker 3: You don't know. So in a sense, that experience is

326
00:15:43,120 --> 00:15:47,360
Speaker 3: what the board brings, and that monetary policy board, as

327
00:15:47,360 --> 00:15:50,320
Speaker 3: we're just chatting about a minute ago, is good. Is

328
00:15:50,360 --> 00:15:53,120
Speaker 3: good that they've made up of the right people. And

329
00:15:53,280 --> 00:15:55,360
Speaker 3: it looks like a given that we had a descent

330
00:15:55,440 --> 00:15:58,160
Speaker 3: to six three discussion.

331
00:15:58,240 --> 00:16:01,480
Speaker 2: But that bothers me because it wasn't by it wasn't unanimous.

332
00:16:01,480 --> 00:16:03,240
Speaker 2: So it tells me that there are three I don't

333
00:16:03,280 --> 00:16:04,640
Speaker 2: know who they are because they don't discose it, but

334
00:16:04,680 --> 00:16:07,520
Speaker 2: there are three obviously quite capable people who didn't agree

335
00:16:07,560 --> 00:16:08,120
Speaker 2: with the other six.

336
00:16:08,160 --> 00:16:12,160
Speaker 3: Now, funny if it was then it was Michelle Bullock,

337
00:16:12,200 --> 00:16:14,960
Speaker 3: and I would be who say it was the other

338
00:16:15,000 --> 00:16:15,560
Speaker 3: one saying hi?

339
00:16:15,880 --> 00:16:17,640
Speaker 2: As we're going through my head or is it or

340
00:16:17,680 --> 00:16:20,200
Speaker 2: is there someone who's got a better consumer base experience

341
00:16:20,200 --> 00:16:22,160
Speaker 2: who knows how consumer is really suffering.

342
00:16:21,960 --> 00:16:24,280
Speaker 1: And when it's going to six through be different.

343
00:16:24,320 --> 00:16:27,400
Speaker 2: It was unanimous, but if it's six three going, wait

344
00:16:27,440 --> 00:16:32,440
Speaker 2: a minute, there's three prosecuting rate reduction and smart people

345
00:16:32,480 --> 00:16:34,960
Speaker 2: by correct and with good and the best they've got

346
00:16:34,960 --> 00:16:36,680
Speaker 2: the best knowledge because there's all been supplied to them

347
00:16:36,680 --> 00:16:40,520
Speaker 2: by the LBA group, you know, the bureaucrats, and they're saying, well,

348
00:16:40,560 --> 00:16:42,600
Speaker 2: we don't think that. Imagine if it had to be

349
00:16:42,720 --> 00:16:44,440
Speaker 2: not six three but five four?

350
00:16:46,160 --> 00:16:46,880
Speaker 1: Now yeah?

351
00:16:47,160 --> 00:16:47,680
Speaker 3: Yeah?

352
00:16:48,040 --> 00:16:51,960
Speaker 1: Or does she get a does she get a casting vote? Yeah,

353
00:16:52,200 --> 00:16:52,680
Speaker 1: they used to.

354
00:16:52,840 --> 00:16:56,080
Speaker 3: There's nine, she has one v kind of don't know.

355
00:16:56,160 --> 00:16:58,320
Speaker 3: It was deputy governor right now. I'd be shocked if

356
00:16:58,320 --> 00:17:02,320
Speaker 3: they voted differently. There's two yay or may or whatever.

357
00:17:02,880 --> 00:17:05,719
Speaker 3: Well of the of the others.

358
00:17:07,880 --> 00:17:09,160
Speaker 1: Why does the majority carry the day?

359
00:17:09,760 --> 00:17:12,800
Speaker 3: Yeah, it does make the weight of the opinion. That's

360
00:17:13,240 --> 00:17:15,399
Speaker 3: you remember also that the Treasury Secretary is on the

361
00:17:15,440 --> 00:17:19,520
Speaker 3: board too, that you know the person who's what the

362
00:17:19,600 --> 00:17:25,120
Speaker 3: right hand woman Jenny Wilkinson of Jim Charmers, she's ex officio,

363
00:17:25,200 --> 00:17:26,680
Speaker 3: so the Treasury Sectory whoever that.

364
00:17:26,760 --> 00:17:29,840
Speaker 5: Is, she's not a board man, but she's she's she's

365
00:17:29,880 --> 00:17:33,480
Speaker 5: on the mountary policy boards. She votes for up or

366
00:17:33,480 --> 00:17:36,480
Speaker 5: down or steady, just like Stephen Kennedy who was on

367
00:17:36,520 --> 00:17:37,399
Speaker 5: the board and I.

368
00:17:37,400 --> 00:17:40,640
Speaker 2: Can't remember, and now he's joined the Prime Minister's Primes Department.

369
00:17:40,720 --> 00:17:46,160
Speaker 3: Yes, so those people, again, they're smart, they know, and

370
00:17:46,240 --> 00:17:48,600
Speaker 3: they sider. Again, they sit around the board table. Can

371
00:17:48,640 --> 00:17:50,880
Speaker 3: you imagine nine people around the board table. They get

372
00:17:51,200 --> 00:17:54,360
Speaker 3: staff in to present different parts of the economy to them.

373
00:17:54,520 --> 00:17:56,760
Speaker 3: So I can't be one hundred percent shot because I've

374
00:17:56,840 --> 00:17:59,639
Speaker 3: unfortunately never been one of these board meetings, but I

375
00:17:59,640 --> 00:18:01,880
Speaker 3: reckonlast time they would have had the person who's done

376
00:18:01,880 --> 00:18:04,639
Speaker 3: the in depth research on the effect of tariffs probably

377
00:18:04,680 --> 00:18:07,120
Speaker 3: would have come in on that Monday before the Tuesday

378
00:18:07,440 --> 00:18:10,040
Speaker 3: and had an hour's conversation about this is what we

379
00:18:10,119 --> 00:18:16,520
Speaker 3: are seeing as possible risks from the tariff war, and

380
00:18:16,560 --> 00:18:18,760
Speaker 3: that person would have presented around the board being oh,

381
00:18:18,880 --> 00:18:21,800
Speaker 3: that's interesting, that's what I haven't asking questions now, that's

382
00:18:21,960 --> 00:18:27,280
Speaker 3: one component of that whole discussion, and that's that's why

383
00:18:27,320 --> 00:18:29,359
Speaker 3: it's such a what do we say, it's such a

384
00:18:29,359 --> 00:18:33,960
Speaker 3: gray area. Sometimes it's easy. Yeah, the economy's week. We're

385
00:18:33,960 --> 00:18:37,200
Speaker 3: in a pandemic. Economy is sort of in a screaming hole.

386
00:18:37,240 --> 00:18:38,880
Speaker 3: We're going to cut rates. That's easy. Then the only

387
00:18:38,920 --> 00:18:41,200
Speaker 3: question is do he twenty five or fifty more? And

388
00:18:42,200 --> 00:18:44,920
Speaker 3: when it's like this gray area, yeah, we've got Yeah,

389
00:18:44,920 --> 00:18:48,680
Speaker 3: the economy is not dreadful. We've already cut a couple

390
00:18:48,720 --> 00:18:50,680
Speaker 3: of times. You know, I'm not so sure. We're hearing

391
00:18:50,720 --> 00:18:54,240
Speaker 3: bits and pieces from our very clever modeling staff in

392
00:18:54,280 --> 00:18:57,000
Speaker 3: the in the in the bank, and what do.

393
00:18:56,960 --> 00:19:00,960
Speaker 2: We do so because then we've got six to three

394
00:19:01,160 --> 00:19:03,760
Speaker 2: and then six of favor of no reduction.

395
00:19:04,240 --> 00:19:05,760
Speaker 1: Three problem a favorite reduction.

396
00:19:05,840 --> 00:19:07,280
Speaker 2: We don't know who they were, We don't know what

397
00:19:07,320 --> 00:19:09,960
Speaker 2: the weight is of those particular individuals relative to the

398
00:19:10,000 --> 00:19:13,239
Speaker 2: decision making. And someone may argue everyone's going to equal weight.

399
00:19:13,400 --> 00:19:17,600
Speaker 2: Fair enough, But but but but then three days later,

400
00:19:17,640 --> 00:19:20,040
Speaker 2: I think three days later, four days later, the unemployment

401
00:19:20,080 --> 00:19:22,359
Speaker 2: number comes out, yes, at four point three.

402
00:19:22,840 --> 00:19:25,720
Speaker 3: Now, and that was again we're talking about data surprises.

403
00:19:25,880 --> 00:19:26,760
Speaker 3: That was a surprise.

404
00:19:26,880 --> 00:19:28,679
Speaker 2: So just on that, is there anything in that that

405
00:19:28,720 --> 00:19:31,520
Speaker 2: would would require adjustment in that four point three?

406
00:19:32,359 --> 00:19:35,360
Speaker 3: I think it was a legitimate number that was actually

407
00:19:35,600 --> 00:19:38,480
Speaker 3: that Yeah, there's not a quirk because of some other

408
00:19:38,600 --> 00:19:42,320
Speaker 3: little thing happening. Yeah, no, no, it was a pretty

409
00:19:42,359 --> 00:19:43,920
Speaker 3: reliable number, a reliable number.

410
00:19:44,240 --> 00:19:47,880
Speaker 2: So I wonder whether that would have made any difference

411
00:19:48,160 --> 00:19:50,040
Speaker 2: at the time, or do you think they still needed

412
00:19:50,040 --> 00:19:52,159
Speaker 2: to see the inflation because when we talked, when we

413
00:19:52,160 --> 00:19:55,320
Speaker 2: look at your checklist, we talked about gudpr inflation and

414
00:19:55,400 --> 00:19:58,600
Speaker 2: labor markets and you know, like unemployment that is employment

415
00:19:58,640 --> 00:20:03,960
Speaker 2: unemployment because you know, we you and I have bought

416
00:20:03,960 --> 00:20:08,480
Speaker 2: everybody with the nayru discussion. But we're heading it looks

417
00:20:08,480 --> 00:20:11,399
Speaker 2: like we're getting closer to the sweet spot, which is

418
00:20:11,440 --> 00:20:13,000
Speaker 2: I think it's currently four and a half.

419
00:20:12,800 --> 00:20:15,520
Speaker 3: According to the RBAS four and a half according Well,

420
00:20:15,560 --> 00:20:16,920
Speaker 3: just by the way, if I can just interrupt for

421
00:20:16,960 --> 00:20:20,000
Speaker 3: one second, the good fog at CBA Commals Bank, their

422
00:20:20,040 --> 00:20:23,800
Speaker 3: economics department did a piece probably two months ago looking

423
00:20:23,800 --> 00:20:27,399
Speaker 3: at NAU. They reckon it's near a four four point zero. Really, yes,

424
00:20:28,119 --> 00:20:30,199
Speaker 3: so I can dig dig that up and have a

425
00:20:30,240 --> 00:20:32,120
Speaker 3: look at it, because they were just sort of saying,

426
00:20:32,119 --> 00:20:36,159
Speaker 3: because wages are starting to decelerate a bit, there's not

427
00:20:36,240 --> 00:20:38,720
Speaker 3: that tightness in the labor market, so maybe it's near

428
00:20:38,760 --> 00:20:41,159
Speaker 3: a four rather than four and a half and a

429
00:20:41,160 --> 00:20:43,159
Speaker 3: lot of people might say four four and a half unemployment.

430
00:20:43,240 --> 00:20:45,760
Speaker 3: You know, it's a similar number. But when you're fine

431
00:20:45,840 --> 00:20:49,199
Speaker 3: tuning interest rates, when your twenty five point cut that

432
00:20:49,280 --> 00:20:50,040
Speaker 3: you deliver.

433
00:20:49,840 --> 00:20:52,200
Speaker 1: All and you're average data based.

434
00:20:51,880 --> 00:20:55,239
Speaker 3: And data driven, if you sort of have that at

435
00:20:55,280 --> 00:20:57,000
Speaker 3: the back of your mind, that twenty five point right

436
00:20:57,040 --> 00:20:59,760
Speaker 3: cup didn't happen because the RBA still reckons it's near

437
00:20:59,760 --> 00:21:03,400
Speaker 3: a four and a half I think, and it might

438
00:21:03,440 --> 00:21:06,960
Speaker 3: not be that high. So yeah, it's a really important consideration.

439
00:21:07,040 --> 00:21:09,200
Speaker 1: So no, no, what do you think they thought then

440
00:21:09,240 --> 00:21:10,280
Speaker 1: that the.

441
00:21:10,280 --> 00:21:12,480
Speaker 3: Four point three that came out the other day. Well,

442
00:21:12,600 --> 00:21:15,639
Speaker 3: funnily enough, the governor did give a talk to the

443
00:21:15,680 --> 00:21:20,200
Speaker 3: Anika Foundation about another week after that, I think it

444
00:21:20,240 --> 00:21:22,960
Speaker 3: was the twenty fourth of July, and she was actually us,

445
00:21:23,000 --> 00:21:24,720
Speaker 3: would you have changed your mind had you had that

446
00:21:24,800 --> 00:21:28,440
Speaker 3: unemployment number? And she said no, said, we were sort

447
00:21:28,480 --> 00:21:31,080
Speaker 3: of anticipating, or we are anticipating the unemployment rate to

448
00:21:31,080 --> 00:21:33,320
Speaker 3: creep towards four point three percent. Now we got there

449
00:21:33,320 --> 00:21:36,719
Speaker 3: in June, so she said it wouldn't have had a

450
00:21:36,720 --> 00:21:39,320
Speaker 3: big influence on their decision making. And that, of course

451
00:21:39,400 --> 00:21:43,040
Speaker 3: was before we had the gym quarter inflation came in

452
00:21:43,480 --> 00:21:47,840
Speaker 3: twenty thirty July. It came out a couple days after

453
00:21:47,880 --> 00:21:50,399
Speaker 3: I speak. So again here we are talking about data dependent.

454
00:21:50,400 --> 00:21:53,480
Speaker 3: Were dated dependent too. We need to see these numbers

455
00:21:53,880 --> 00:21:58,320
Speaker 3: so they I think, if we get one more or

456
00:21:58,359 --> 00:22:02,640
Speaker 3: two more employment labor market numbers, and if we get

457
00:22:02,640 --> 00:22:05,840
Speaker 3: to a four point four, like one tenth away like that,

458
00:22:06,720 --> 00:22:09,399
Speaker 3: that's nothing in the scheme of an economy of fourteen

459
00:22:09,400 --> 00:22:11,359
Speaker 3: and a half million people. Yeah, we're a big economy,

460
00:22:11,480 --> 00:22:14,040
Speaker 3: you know, almost three trillion dollar economy here in Australia.

461
00:22:14,040 --> 00:22:15,760
Speaker 3: Don't forget. So do you just get a point one

462
00:22:15,840 --> 00:22:18,640
Speaker 3: change in the unterplant rate and it's up. That will

463
00:22:18,680 --> 00:22:22,000
Speaker 3: be the thing that the a Okay, we've now running

464
00:22:22,000 --> 00:22:25,080
Speaker 3: a risk and of course they overshoot, and by that

465
00:22:25,200 --> 00:22:28,600
Speaker 3: is fine. Tuning an economy is really hard when there's

466
00:22:28,640 --> 00:22:29,960
Speaker 3: so many moving parts.

467
00:22:29,720 --> 00:22:32,720
Speaker 6: That had been pretty good at they've been pretty good, yes,

468
00:22:33,040 --> 00:22:35,520
Speaker 6: But if they just get there and this has not

469
00:22:35,560 --> 00:22:38,200
Speaker 6: been critical at this stage, if they just get the

470
00:22:38,480 --> 00:22:41,280
Speaker 6: analysis of the tariff effect a little bit wrong, or

471
00:22:41,320 --> 00:22:42,680
Speaker 6: they get the effect.

472
00:22:42,480 --> 00:22:46,600
Speaker 3: Of consumer spending a little bit wrong, that we haven't

473
00:22:46,640 --> 00:22:50,720
Speaker 3: responded to the rate cuts and the falling cost of

474
00:22:50,720 --> 00:22:53,359
Speaker 3: living pressures. Because inflations back down these sort of things,

475
00:22:53,800 --> 00:22:56,320
Speaker 3: even by a small amount, then of course, gee, they've

476
00:22:56,320 --> 00:23:00,399
Speaker 3: got to revise their forecasts, and therefore they revise their

477
00:23:00,760 --> 00:23:03,160
Speaker 3: interest rate profile, and therefore they deliver more rate cuts.

478
00:23:03,160 --> 00:23:06,200
Speaker 3: And that's this whole scenario when we're sitting here thinking, well,

479
00:23:06,200 --> 00:23:09,560
Speaker 3: well rates be in a year, Well, whatever I say

480
00:23:09,600 --> 00:23:13,560
Speaker 3: today will be wrong. I could probably get the direction right.

481
00:23:14,000 --> 00:23:16,360
Speaker 3: They're probably going to be lower. I'd have ninety five

482
00:23:16,400 --> 00:23:19,720
Speaker 3: percent confidence about that. But whether it's three point three,

483
00:23:19,960 --> 00:23:23,160
Speaker 3: three point one, two point eight, there are so many

484
00:23:23,200 --> 00:23:24,040
Speaker 3: moving parts.

485
00:23:24,480 --> 00:23:29,520
Speaker 2: So then at the end of July, the ABS printed

486
00:23:30,000 --> 00:23:34,480
Speaker 2: their CBI number inflation number, both headline and trimmed.

487
00:23:36,080 --> 00:23:39,560
Speaker 1: Headlines. Unbelievably good, two point one beautiful.

488
00:23:39,560 --> 00:23:42,199
Speaker 2: But of course, of course, you know that's sort of

489
00:23:43,119 --> 00:23:46,600
Speaker 2: not quite accurate, or it's accurate, but it's not necessarily

490
00:23:46,600 --> 00:23:49,320
Speaker 2: the proper reflection of what's actually going on the gone

491
00:23:49,440 --> 00:23:51,000
Speaker 2: because you know, there's all sorts of things that go

492
00:23:51,160 --> 00:23:55,000
Speaker 2: up will go down as a result of various government policies,

493
00:23:56,680 --> 00:23:59,399
Speaker 2: one of which, of course, is you know the seventy

494
00:23:59,600 --> 00:24:01,240
Speaker 2: seven whatever is seventy five bucks a quarter.

495
00:24:01,600 --> 00:24:04,200
Speaker 3: Yeah, the electricity subsidence, which is still there. It's for

496
00:24:04,240 --> 00:24:06,119
Speaker 3: another two quarters. By the way, it comes off at

497
00:24:06,160 --> 00:24:09,879
Speaker 3: the first of January. In the election campaign they extend

498
00:24:09,920 --> 00:24:12,520
Speaker 3: one of the promises was a six month extension, so

499
00:24:12,520 --> 00:24:16,080
Speaker 3: it's still there for the September and December quarters. It

500
00:24:16,160 --> 00:24:18,000
Speaker 3: drops off in the March quarter twenty twenty six. So

501
00:24:18,040 --> 00:24:22,240
Speaker 3: that's where everyone's expecting a big jumping headline inflation.

502
00:24:23,640 --> 00:24:32,240
Speaker 2: Do you think it when the subsidy disappears in January?

503
00:24:33,160 --> 00:24:37,720
Speaker 1: Do you think that which means that headline inflation will jump.

504
00:24:38,200 --> 00:24:41,040
Speaker 2: It will go up because electricity prices now be baked in,

505
00:24:41,080 --> 00:24:44,240
Speaker 2: and electricity prices is one of the biggest, biggest it's

506
00:24:44,240 --> 00:24:46,040
Speaker 2: a big, heavily weighted.

507
00:24:47,280 --> 00:24:49,720
Speaker 1: Because everyone uses electricity, everyone.

508
00:24:49,400 --> 00:24:54,400
Speaker 2: Everywhere, every household. It's baits in everything, in the price

509
00:24:54,440 --> 00:24:59,560
Speaker 2: of everything exactly. Do you think that they'll trim that out.

510
00:25:00,400 --> 00:25:01,879
Speaker 3: Yes, they'll trim it out on the upside, just as

511
00:25:01,880 --> 00:25:04,720
Speaker 3: they've trimmed it out on the downside. So the and

512
00:25:04,760 --> 00:25:08,240
Speaker 3: this is why there's quite a big gap between headline

513
00:25:08,240 --> 00:25:12,560
Speaker 3: inflation and the trimmed mean the trimmed mean yeah, because

514
00:25:12,560 --> 00:25:16,760
Speaker 3: we're two point seven for the trim meanum two point

515
00:25:16,760 --> 00:25:20,240
Speaker 3: one point yeah, And that part of its petrol took

516
00:25:20,320 --> 00:25:22,120
Speaker 3: peture is actually pretty chip was cheap and the Grene

517
00:25:22,160 --> 00:25:24,879
Speaker 3: quarter still is so far September quarter, and that was

518
00:25:24,920 --> 00:25:28,280
Speaker 3: a big volatile item. But what the RBA do because

519
00:25:28,440 --> 00:25:32,560
Speaker 3: those things like tobacco, which is excise tax and we

520
00:25:32,560 --> 00:25:36,200
Speaker 3: won't get into the tobacko this tax discussion, but the

521
00:25:36,240 --> 00:25:44,680
Speaker 3: whole methodology or reasoning for trimming out volatile price item.

522
00:25:44,680 --> 00:25:46,400
Speaker 3: It's not to say they didn't exist, because yeah, I'm

523
00:25:46,400 --> 00:25:48,520
Speaker 3: happy to save seventy five bucks on my electricity and

524
00:25:49,119 --> 00:25:50,760
Speaker 3: saving ten bucks and I fill up my car because

525
00:25:50,800 --> 00:25:53,960
Speaker 3: petrol's down. Fine, that's all good. So that's cost of living.

526
00:25:54,680 --> 00:25:56,680
Speaker 3: But for the RBA, they know that as I said,

527
00:25:56,760 --> 00:26:00,480
Speaker 3: as you said January one, twenty twenty six, prices of ay,

528
00:26:00,680 --> 00:26:02,840
Speaker 3: you won't get that seventy five bucks subs so your

529
00:26:02,960 --> 00:26:06,320
Speaker 3: full full fee, your full quarterly bill will be much higher.

530
00:26:06,760 --> 00:26:09,040
Speaker 3: Who knows what happens to oil and petrol prices, but

531
00:26:09,160 --> 00:26:10,800
Speaker 3: it's not impossible to think they go back up to

532
00:26:10,800 --> 00:26:13,440
Speaker 3: two bucks of lead, so oh, you know they'll take

533
00:26:13,440 --> 00:26:17,280
Speaker 3: that out because that is not what interstrates are managing.

534
00:26:17,440 --> 00:26:20,560
Speaker 3: Interest rates are managing. They have an effect on the

535
00:26:20,560 --> 00:26:25,400
Speaker 3: con but intrates are managing our borrowing capacity, our debt

536
00:26:25,440 --> 00:26:29,920
Speaker 3: repayment schedules for the household and the business sector. They

537
00:26:29,960 --> 00:26:33,840
Speaker 3: put a hurdle, a potential hurdle into will I undertake

538
00:26:33,880 --> 00:26:37,240
Speaker 3: that investment or buy that property? Ah, this interstrate, I won't.

539
00:26:37,280 --> 00:26:39,960
Speaker 3: It's a bit too high. Oh fifty points low. Yeah,

540
00:26:39,960 --> 00:26:42,200
Speaker 3: I can afford to borrow an extra fifty grand. I'll

541
00:26:42,240 --> 00:26:44,440
Speaker 3: go and auction and buy that house. Or instead of

542
00:26:44,440 --> 00:26:46,040
Speaker 3: buying that house, I'll buy the other house, which is

543
00:26:46,040 --> 00:26:47,560
Speaker 3: a bit more expensive, but I really love it if

544
00:26:47,560 --> 00:26:49,560
Speaker 3: I can afford to do it, So it does work.

545
00:26:49,600 --> 00:26:52,760
Speaker 3: That's again how interest rates work, and that's why that's

546
00:26:52,800 --> 00:26:55,760
Speaker 3: what they're trying to target. It's that psychology, the mentality

547
00:26:56,000 --> 00:27:00,840
Speaker 3: and even the hard facts on borrowing and debt service obligations.

548
00:27:00,880 --> 00:27:04,080
Speaker 3: By adjusting the interest rates to change how you and

549
00:27:04,119 --> 00:27:07,479
Speaker 3: I and all the listeners behave to impact economic growth,

550
00:27:07,680 --> 00:27:08,840
Speaker 3: to impact inflation.

551
00:27:09,440 --> 00:27:13,480
Speaker 2: It's it is a psychological game, a game of psychology

552
00:27:13,600 --> 00:27:16,080
Speaker 2: probably the better way putting it. Just interesting on that

553
00:27:16,160 --> 00:27:17,879
Speaker 2: and we will get onto the hard stuff in a second,

554
00:27:17,920 --> 00:27:20,840
Speaker 2: But just interesting when you talk when we talk about

555
00:27:20,840 --> 00:27:23,000
Speaker 2: cigarettes and the xis and cigarettes. So they got on

556
00:27:23,200 --> 00:27:25,160
Speaker 2: a cross a pack of cigarettes that sixty bucks or whatever.

557
00:27:25,160 --> 00:27:27,280
Speaker 3: It is something horrendous.

558
00:27:27,440 --> 00:27:28,760
Speaker 1: But you know what's interesting about that.

559
00:27:29,640 --> 00:27:31,880
Speaker 2: I was reading a report the other days and says

560
00:27:31,880 --> 00:27:34,720
Speaker 2: that most of the cigarettes that are bought in Australia

561
00:27:34,760 --> 00:27:37,480
Speaker 2: today are illegal and they're paying for.

562
00:27:37,520 --> 00:27:38,360
Speaker 1: Twenty bucks a pack.

563
00:27:39,000 --> 00:27:42,000
Speaker 2: And what's interesting about that, though, is if you actually

564
00:27:42,080 --> 00:27:44,200
Speaker 2: add the mant of cigarettes that are board at twenty

565
00:27:44,240 --> 00:27:46,760
Speaker 2: dollars a pack, plus the man of cigarettes that are

566
00:27:46,840 --> 00:27:49,639
Speaker 2: bought at you know, the legal ones that were with

567
00:27:49,800 --> 00:27:54,320
Speaker 2: massive excise on them, and let's say it's fifty to

568
00:27:54,359 --> 00:27:57,240
Speaker 2: fifty and you're divided by two, the price cigarettes have

569
00:27:57,240 --> 00:27:57,880
Speaker 2: actually come down.

570
00:27:58,680 --> 00:28:01,280
Speaker 1: Yes, THEBA doesn't, but the NBA does look at the

571
00:28:01,320 --> 00:28:01,840
Speaker 1: black market.

572
00:28:02,080 --> 00:28:03,679
Speaker 3: And I don't know if I should disclose this on

573
00:28:03,720 --> 00:28:06,520
Speaker 3: the on the webinar, but I'm aware of some people

574
00:28:06,520 --> 00:28:10,119
Speaker 3: who are tobacco addict. They're smokers, they're not going to stop.

575
00:28:11,920 --> 00:28:13,120
Speaker 3: They've discovered where.

576
00:28:12,880 --> 00:28:15,639
Speaker 1: You can buy jeep singing everywhere.

577
00:28:15,800 --> 00:28:21,119
Speaker 3: And you know, and it makes because they're addicted, they'll

578
00:28:21,119 --> 00:28:24,360
Speaker 3: go to the cheap place, pay fifteen to twenty bucks

579
00:28:24,359 --> 00:28:26,359
Speaker 3: a packet rather than fifty sixty bucks a packet.

580
00:28:26,400 --> 00:28:30,840
Speaker 1: And what that doesn't so good. It's just the black market,

581
00:28:31,000 --> 00:28:32,680
Speaker 1: you understand that, but it is.

582
00:28:34,720 --> 00:28:36,240
Speaker 3: Of course, the government doesn't collect any revenue.

583
00:28:36,280 --> 00:28:38,440
Speaker 1: They don't collect the consumers still spend it, though.

584
00:28:38,840 --> 00:28:41,200
Speaker 3: It gets caught up because as the what do we

585
00:28:41,320 --> 00:28:45,400
Speaker 3: call it, the crook selling the black market tobacco then

586
00:28:45,440 --> 00:28:46,920
Speaker 3: goes and spends it and does things.

587
00:28:47,720 --> 00:28:49,560
Speaker 1: But the consumer spend it and the consumers.

588
00:28:49,320 --> 00:28:51,000
Speaker 3: And so there's money. The stillet. The black market is

589
00:28:51,000 --> 00:28:52,600
Speaker 3: still part of the.

590
00:28:52,000 --> 00:28:54,880
Speaker 1: The tax office will tax it.

591
00:28:54,040 --> 00:28:56,840
Speaker 3: If they spend it in they have to pay GST

592
00:28:57,040 --> 00:29:01,080
Speaker 3: on their things that they buy legitimately. So but for

593
00:29:01,120 --> 00:29:03,760
Speaker 3: the tobacco, that's that's a different sort of question. I

594
00:29:03,800 --> 00:29:06,480
Speaker 3: think the xcise has gone up so much that it

595
00:29:06,480 --> 00:29:11,160
Speaker 3: has fueled the black market because when there's a market

596
00:29:11,160 --> 00:29:14,840
Speaker 3: distortion there crooks can come and it's like other drugs.

597
00:29:14,600 --> 00:29:16,040
Speaker 1: But we've got a data distortion too.

598
00:29:16,080 --> 00:29:18,240
Speaker 3: Then marijuana and these are things. If it's illegal and

599
00:29:18,320 --> 00:29:19,520
Speaker 3: someone come in and sell it to.

600
00:29:19,840 --> 00:29:22,720
Speaker 2: For me, they should take cigarettes and alcohol out altogether,

601
00:29:22,800 --> 00:29:25,959
Speaker 2: because it's like out of the out of the basket,

602
00:29:26,000 --> 00:29:29,800
Speaker 2: out of the basket, because it's distorted.

603
00:29:29,920 --> 00:29:33,160
Speaker 3: It's massively distorted, and it does we're talking about the

604
00:29:33,200 --> 00:29:36,840
Speaker 3: headline CPI before you know, petrol prices and electricity subsidies

605
00:29:36,840 --> 00:29:38,760
Speaker 3: in and out, you know, going in and then coming

606
00:29:38,760 --> 00:29:40,840
Speaker 3: back off, all those things which are which are cost

607
00:29:40,840 --> 00:29:43,640
Speaker 3: of living foreshore. But for the for the Reserve bank,

608
00:29:43,680 --> 00:29:48,440
Speaker 3: when you've got an excise change on yeah, tobacco and alcohol,

609
00:29:49,640 --> 00:29:52,360
Speaker 3: and they've got quite high weightings. In fact, the other

610
00:29:52,400 --> 00:29:56,800
Speaker 3: day because everyone used it tobacco and alcohol, they've got

611
00:29:56,840 --> 00:30:01,680
Speaker 3: a bigger waiting the electricity. No, they do. People spend

612
00:30:01,680 --> 00:30:04,720
Speaker 3: more on alcohol and tobacco than the electricity bill. And

613
00:30:04,760 --> 00:30:06,360
Speaker 3: when you think about it, Mark, I think the average

614
00:30:06,360 --> 00:30:08,440
Speaker 3: electricity bill depends on some winter and all that sort

615
00:30:08,440 --> 00:30:12,600
Speaker 3: of stuff, is about three to four hundred bucks a quarter,

616
00:30:12,960 --> 00:30:17,000
Speaker 3: approximately four hundred bucks a quarter for an average normal household.

617
00:30:17,040 --> 00:30:20,760
Speaker 3: You know whatever, think about that. That's there's twelve weeks

618
00:30:20,760 --> 00:30:25,120
Speaker 3: and a quarter. That's thirty bucks thirty five bucks a week. Now,

619
00:30:25,440 --> 00:30:28,840
Speaker 3: decent bottle of wines fifteen twenty bucks. You know, a

620
00:30:28,880 --> 00:30:31,640
Speaker 3: couple of beers the pubs easy thirty bucks. And so

621
00:30:31,840 --> 00:30:34,920
Speaker 3: you think about that, they people actually spend more. This

622
00:30:35,000 --> 00:30:37,160
Speaker 3: is the thing that I find staggering when this is

623
00:30:37,160 --> 00:30:39,040
Speaker 3: the thing about data. And I love being an economist.

624
00:30:39,360 --> 00:30:41,520
Speaker 3: You know, sometimes you dig into the day to think,

625
00:30:41,800 --> 00:30:45,479
Speaker 3: my god, people spend more on that than they do

626
00:30:45,520 --> 00:30:50,280
Speaker 3: on electricity. So do we need a subsidy for alcohol drinkers?

627
00:30:51,360 --> 00:30:54,880
Speaker 3: You know, you don't get it. No, no, because that's

628
00:30:54,920 --> 00:30:56,960
Speaker 3: maybe that's for health reasons that we've got exercise on

629
00:30:57,280 --> 00:31:02,280
Speaker 3: health reasons and tax reasons. Is so, but those are

630
00:31:02,280 --> 00:31:04,960
Speaker 3: things make the fascinating, absolutely fascinating.

631
00:31:05,120 --> 00:31:09,560
Speaker 2: It's very interesting. So so we we. The next meeting

632
00:31:09,600 --> 00:31:10,560
Speaker 2: is next week.

633
00:31:11,160 --> 00:31:14,560
Speaker 3: Twelve Tuesday, twelve thirty, Sydney time.

634
00:31:14,600 --> 00:31:17,640
Speaker 2: They make their announcement, right, so the meat Monday, Tuesday,

635
00:31:17,800 --> 00:31:22,320
Speaker 2: great Monday and Tuesday. And let's just go through your board. Yeah,

636
00:31:22,520 --> 00:31:24,000
Speaker 2: like your checklist because.

637
00:31:24,320 --> 00:31:26,280
Speaker 3: A few things have changed since last time. Yep.

638
00:31:26,480 --> 00:31:28,720
Speaker 2: Absolutely, and it's worth it's worth us going through it.

639
00:31:28,720 --> 00:31:32,000
Speaker 2: And by by the way, we will admit it. We

640
00:31:32,040 --> 00:31:35,720
Speaker 2: had either in neutral or easy, most mostly an easy.

641
00:31:36,840 --> 00:31:39,880
Speaker 1: Yeah, and we're wrong. But we'll go down there, we'll

642
00:31:39,920 --> 00:31:40,320
Speaker 1: go down.

643
00:31:40,640 --> 00:31:42,320
Speaker 3: We'll dust ourselves off and get up again.

644
00:31:42,400 --> 00:31:45,680
Speaker 1: This time we'll get it right. I'm pretty sure, right mate,

645
00:31:45,720 --> 00:31:46,320
Speaker 1: what do you reckon?

646
00:31:46,560 --> 00:31:49,240
Speaker 3: Okay? And remembering that on our checklist here, it's the

647
00:31:49,280 --> 00:31:51,440
Speaker 3: items near the top that are the most important. These

648
00:31:51,440 --> 00:31:54,600
Speaker 3: ones are less important. They still have some influence, but

649
00:31:54,640 --> 00:31:56,800
Speaker 3: it's really the top of matters GDP. We haven't had

650
00:31:56,800 --> 00:31:59,840
Speaker 3: any new news in the last few weeks, so we

651
00:32:00,040 --> 00:32:03,120
Speaker 3: know that GDP growth one point three percent and probably

652
00:32:03,120 --> 00:32:04,440
Speaker 3: only going to be about one and a half when

653
00:32:04,440 --> 00:32:07,479
Speaker 3: we get the numbers in a month's time, neutral to easing.

654
00:32:08,000 --> 00:32:08,520
Speaker 3: Pretty weak.

655
00:32:08,640 --> 00:32:11,560
Speaker 2: So in other words, that's about half close to half

656
00:32:11,600 --> 00:32:14,719
Speaker 2: of what they use in their own forecasting.

657
00:32:15,160 --> 00:32:19,320
Speaker 3: We should be great three quarter percent approximately, we're half

658
00:32:19,400 --> 00:32:19,880
Speaker 3: that now.

659
00:32:21,040 --> 00:32:24,120
Speaker 1: Week and Treasury. That's treasury too, so not just not

660
00:32:24,200 --> 00:32:24,400
Speaker 1: just the.

661
00:32:24,880 --> 00:32:28,120
Speaker 3: It's Treasury, and I think most private sector forecast, academic conscer. Yeah,

662
00:32:28,120 --> 00:32:29,880
Speaker 3: we should be growing, we'll call it between two and

663
00:32:29,880 --> 00:32:33,200
Speaker 3: a half and three percent something slightly different. Numbers near

664
00:32:33,280 --> 00:32:35,800
Speaker 3: three percent, so we're weak. So you need more into

665
00:32:35,800 --> 00:32:37,080
Speaker 3: straight cuts to kick start.

666
00:32:37,840 --> 00:32:39,360
Speaker 1: When's the next GDP will come out again?

667
00:32:39,520 --> 00:32:42,400
Speaker 3: It's third of September, right, so it's still good four

668
00:32:42,400 --> 00:32:43,440
Speaker 3: odd weeks away.

669
00:32:43,240 --> 00:32:45,760
Speaker 1: So quick, so let's wait for more data.

670
00:32:45,800 --> 00:32:50,640
Speaker 3: But anyway, that's that much that's inflation. Well, as we

671
00:32:50,760 --> 00:32:52,960
Speaker 3: just said, Dune quarter, I'm going to slam downk that

672
00:32:53,040 --> 00:32:54,400
Speaker 3: one into the easing cycle.

673
00:32:54,720 --> 00:32:57,000
Speaker 1: It's the momentum, but it's still a little bit of

674
00:32:57,040 --> 00:32:57,680
Speaker 1: a little bit away.

675
00:32:57,720 --> 00:33:01,840
Speaker 3: Two point seven trimmed mean annual has a one percent

676
00:33:03,000 --> 00:33:06,920
Speaker 3: four quarters ago. Next quarter a ones dropped out. Yep,

677
00:33:07,400 --> 00:33:09,320
Speaker 3: that only has to be replaced by a point eight,

678
00:33:09,640 --> 00:33:12,120
Speaker 3: and you're at two point five, so it was replaced

679
00:33:12,120 --> 00:33:13,800
Speaker 3: by two point seven, which I think is more likely.

680
00:33:13,800 --> 00:33:15,400
Speaker 3: You're going to get your annual figure at two point

681
00:33:15,440 --> 00:33:19,760
Speaker 3: four percent. OK So that's the beauty of annualized numbers.

682
00:33:19,760 --> 00:33:21,760
Speaker 3: You move, you drop out the last add on, and

683
00:33:21,760 --> 00:33:22,800
Speaker 3: you drop out last add on.

684
00:33:22,920 --> 00:33:24,280
Speaker 1: You as you like it.

685
00:33:24,360 --> 00:33:26,560
Speaker 2: I don't like the historical thing because I would rather

686
00:33:26,640 --> 00:33:31,560
Speaker 2: have two past to one forward and two past and

687
00:33:31,680 --> 00:33:33,520
Speaker 2: two extrapolations correat.

688
00:33:33,680 --> 00:33:37,280
Speaker 3: But as in stand, Michelle Bullet can sort of say, well,

689
00:33:37,280 --> 00:33:39,840
Speaker 3: the last two quarters for trimmin have been point five

690
00:33:39,880 --> 00:33:43,520
Speaker 3: and point seven, so one point two annualize that you're

691
00:33:43,840 --> 00:33:46,880
Speaker 3: two point four. So in the last six months. She

692
00:33:46,920 --> 00:33:48,840
Speaker 3: did do that in the februe. She did that when

693
00:33:48,840 --> 00:33:53,440
Speaker 3: she justified the February cut. Correct, correct, exactly. Labor market,

694
00:33:53,720 --> 00:33:58,240
Speaker 3: I'm moving that almost to easing. We discussed that jump

695
00:33:58,280 --> 00:34:01,000
Speaker 3: and unemployment last month, and yes it's one month's number,

696
00:34:02,200 --> 00:34:06,120
Speaker 3: but four point three is getting near the nay. And

697
00:34:06,160 --> 00:34:09,200
Speaker 3: if we get any downside to the labor market, that

698
00:34:09,320 --> 00:34:12,319
Speaker 3: is unemployment goes up more, that will quickly go into

699
00:34:12,320 --> 00:34:13,319
Speaker 3: the easing side of the cost.

700
00:34:13,360 --> 00:34:17,680
Speaker 2: And given that unemployment now is under their mandate, is

701
00:34:17,719 --> 00:34:21,480
Speaker 2: something that must consider post the revision ext on.

702
00:34:21,480 --> 00:34:24,880
Speaker 3: Point, that is the revamp of the RBA eighteen months

703
00:34:24,880 --> 00:34:29,040
Speaker 3: two years ago. Their mandate inflation, yep, that was pretty

704
00:34:29,120 --> 00:34:31,040
Speaker 3: much unchanged. But they've also got to take a look

705
00:34:31,040 --> 00:34:33,760
Speaker 3: at the labor market. Full employment is their objective.

706
00:34:33,800 --> 00:34:37,360
Speaker 2: And I say, any labor represents a labo. You are

707
00:34:37,480 --> 00:34:39,920
Speaker 2: representeds on the reserve being board are going to be

708
00:34:39,920 --> 00:34:40,760
Speaker 2: pushing that anyway.

709
00:34:40,760 --> 00:34:45,480
Speaker 3: Correct. So the people the union linked fellow, some of

710
00:34:45,480 --> 00:34:47,800
Speaker 3: the other academic economists who look at the labor market,

711
00:34:47,840 --> 00:34:50,560
Speaker 3: you know, the labor market specialists or part of their specialty,

712
00:34:50,800 --> 00:34:52,040
Speaker 3: they'll be sort of saying, yeah, we've got a bit

713
00:34:52,080 --> 00:34:53,879
Speaker 3: of slack coming in the labor market. Leave the RBA

714
00:34:53,880 --> 00:34:58,440
Speaker 3: acknowledge it. Yeah, yep, wages growth. I'm putting that stilly

715
00:34:58,560 --> 00:35:01,960
Speaker 3: neutral because there's still a hint of we get the

716
00:35:01,960 --> 00:35:03,440
Speaker 3: next way. Oh, this is a funny thing. We get

717
00:35:03,480 --> 00:35:06,240
Speaker 3: the next wages number. I guess what the day after

718
00:35:06,280 --> 00:35:08,360
Speaker 3: the board meeting, it comes out on the thirteenth.

719
00:35:08,440 --> 00:35:09,080
Speaker 1: That bothers me.

720
00:35:09,640 --> 00:35:11,359
Speaker 3: But why didn't someone just say we'll make the board

721
00:35:11,360 --> 00:35:15,000
Speaker 3: meeting on the fourteenth. Yeah, but anyway, so it currently

722
00:35:15,040 --> 00:35:18,160
Speaker 3: wages growth three point four. It's like, as we say,

723
00:35:18,200 --> 00:35:20,319
Speaker 3: the goalie lock's not too hot, not too cold, just right.

724
00:35:20,320 --> 00:35:24,320
Speaker 3: So I'm putting that in neutral international economy, I'm putting

725
00:35:24,320 --> 00:35:27,240
Speaker 3: that towards easing, even though the FED has said they're

726
00:35:27,280 --> 00:35:30,960
Speaker 3: pausing on their rate cuts for US Federal Reserve and

727
00:35:31,000 --> 00:35:33,640
Speaker 3: some other central banks have too. When we look at

728
00:35:33,640 --> 00:35:35,960
Speaker 3: the hard data on the US in recent times, it's

729
00:35:35,960 --> 00:35:38,440
Speaker 3: been pretty soft. They had the jobs numbers.

730
00:35:38,160 --> 00:35:39,879
Speaker 1: But there is GDP was pretty good.

731
00:35:39,960 --> 00:35:43,040
Speaker 3: GDP is okay, but the labor market's week yeah, and

732
00:35:43,120 --> 00:35:48,120
Speaker 3: the economy there is okay. But the FED has been

733
00:35:48,440 --> 00:35:51,160
Speaker 3: postponing cuts the last couple of times because of tariff issues.

734
00:35:51,160 --> 00:35:53,280
Speaker 3: They're not sure how they're going to impact the US economy.

735
00:35:53,600 --> 00:35:55,359
Speaker 3: But I think I look at the futures market now

736
00:35:55,360 --> 00:35:57,000
Speaker 3: there's a couple of rate cuts priced in over the

737
00:35:57,040 --> 00:35:59,400
Speaker 3: next six months. And of course China is still a

738
00:35:59,440 --> 00:36:03,879
Speaker 3: weak The UK is an absolute disaster. We just had Kei.

739
00:36:03,920 --> 00:36:07,920
Speaker 3: We New Zealand unemployment numbers. New Zealand's not everything, but

740
00:36:07,960 --> 00:36:09,960
Speaker 3: they had really poor numbers and they've already cut to

741
00:36:10,040 --> 00:36:12,480
Speaker 3: three point twenty five. More rate cuts coming in ki

742
00:36:12,560 --> 00:36:14,919
Speaker 3: Wei Land, so you know there's a lot still going

743
00:36:14,920 --> 00:36:19,799
Speaker 3: on on the neutral toweezing side. House prices picking up

744
00:36:19,880 --> 00:36:22,160
Speaker 3: olive at neutral.

745
00:36:22,000 --> 00:36:24,120
Speaker 1: They shouldn't really determine interest.

746
00:36:23,920 --> 00:36:25,799
Speaker 3: And they're not part of the mandate, but they have

747
00:36:25,880 --> 00:36:28,160
Speaker 3: a wealth effect of the ABA doesn't like bubbles or

748
00:36:28,160 --> 00:36:32,880
Speaker 3: crashes on If house time grows by between three and

749
00:36:33,000 --> 00:36:35,280
Speaker 3: five percent year in year out, the ABA be happy.

750
00:36:35,960 --> 00:36:37,359
Speaker 3: They don't want to be ten on twenty. They don't

751
00:36:37,400 --> 00:36:41,479
Speaker 3: want to be minus ten. So it's only when they're

752
00:36:41,760 --> 00:36:45,680
Speaker 3: either booming or busting that they become an issue. Retail sales,

753
00:36:45,719 --> 00:36:49,200
Speaker 3: I'm moving to sort of neutral easing. We actually had

754
00:36:49,239 --> 00:36:52,840
Speaker 3: an okay number for retail sales for the month of

755
00:36:52,920 --> 00:36:56,960
Speaker 3: June sales, so again one of these ones that might

756
00:36:57,000 --> 00:36:59,239
Speaker 3: have been just the end of financial year sales. We're

757
00:36:59,280 --> 00:37:02,960
Speaker 3: clearing our tree of furniture and whatnot, and so that's

758
00:37:02,960 --> 00:37:05,560
Speaker 3: why I've got it sort of easing ish, but not

759
00:37:05,600 --> 00:37:08,360
Speaker 3: a slam dunk easing. And because the other thing is

760
00:37:08,360 --> 00:37:10,160
Speaker 3: that consumer sentiment picked up a bit. I'm going to

761
00:37:10,200 --> 00:37:12,880
Speaker 3: put that exactly where retail sales numbers are too, because

762
00:37:12,880 --> 00:37:15,520
Speaker 3: consumer sentiment was at a three year high. Now I

763
00:37:15,600 --> 00:37:17,920
Speaker 3: might think, oh, gee, that's nice and strong. However, and

764
00:37:18,000 --> 00:37:21,640
Speaker 3: did you realize there are still about ten percent more

765
00:37:21,640 --> 00:37:25,840
Speaker 3: pessimists than optimists, So consumer sentiment no surprise. When the

766
00:37:25,920 --> 00:37:28,000
Speaker 3: raid hikes were coming, when inflation was eight percent or

767
00:37:28,040 --> 00:37:32,200
Speaker 3: seven point eight percent, consumers senterent was down down the gurglar.

768
00:37:32,360 --> 00:37:34,919
Speaker 3: Now with a couple of rate cuts and inflation coming

769
00:37:34,960 --> 00:37:38,239
Speaker 3: back down, consumer sentiments edged up. Still a long way

770
00:37:38,239 --> 00:37:40,240
Speaker 3: from neutral, but we need a bit.

771
00:37:40,120 --> 00:37:41,760
Speaker 1: More relative to previous periods.

772
00:37:41,920 --> 00:37:44,560
Speaker 3: YEP. Building approval, I'm gonna put that in easing. Building

773
00:37:44,600 --> 00:37:47,640
Speaker 3: approvals are picking up, but we need them to. We

774
00:37:47,680 --> 00:37:50,680
Speaker 3: want to build more good for GDP. Obviously, if you're

775
00:37:50,719 --> 00:37:54,480
Speaker 3: building bricks and cement and all the appliances that go

776
00:37:54,560 --> 00:37:57,040
Speaker 3: into a house and the sink and the dishwasher and

777
00:37:57,360 --> 00:38:00,400
Speaker 3: all the white goods, we need more of that and

778
00:38:00,400 --> 00:38:02,520
Speaker 3: we need it to meet demand. The government, by the way,

779
00:38:02,640 --> 00:38:05,000
Speaker 3: just came out earlier this week and said that their

780
00:38:05,040 --> 00:38:08,520
Speaker 3: student intake was actually going to be revised up, up,

781
00:38:09,239 --> 00:38:11,120
Speaker 3: up by twenty five thousand. I think it was to

782
00:38:11,160 --> 00:38:12,400
Speaker 3: two eighty five thousand.

783
00:38:13,000 --> 00:38:13,280
Speaker 1: Wow.

784
00:38:13,320 --> 00:38:19,120
Speaker 3: So any signs that we're getting a material slowing in

785
00:38:19,360 --> 00:38:24,360
Speaker 3: net immigration and students accounted there's immigration ain't going to happen,

786
00:38:25,320 --> 00:38:26,440
Speaker 3: so that puts demand on.

787
00:38:26,400 --> 00:38:27,600
Speaker 1: Housing still, that's amazing.

788
00:38:28,560 --> 00:38:31,399
Speaker 3: Yeah, or the universities I think have lobbied them, as

789
00:38:31,400 --> 00:38:34,040
Speaker 3: the universities make a lot of money from foreign students,

790
00:38:34,200 --> 00:38:35,520
Speaker 3: make a truckload of money.

791
00:38:35,840 --> 00:38:36,439
Speaker 1: They need it.

792
00:38:37,560 --> 00:38:40,520
Speaker 3: Business investment are putting on easing still too low. This

793
00:38:40,560 --> 00:38:42,480
Speaker 3: is part of the productivity stuff that maybe we can

794
00:38:42,520 --> 00:38:45,759
Speaker 3: talk about next time. But we need cap X, We

795
00:38:45,800 --> 00:38:50,719
Speaker 3: need business to invest in machinery, equipment, AI technology and everything.

796
00:38:51,080 --> 00:38:53,359
Speaker 3: And at the moment, business investments actually down and where

797
00:38:53,400 --> 00:38:55,640
Speaker 3: it was a year ago. Interest rates are a bit

798
00:38:55,640 --> 00:38:58,000
Speaker 3: of a handbreak. Global conditions are a bit of a handbrake,

799
00:38:58,040 --> 00:39:01,200
Speaker 3: but we need business investment to kick higher business confidence.

800
00:39:01,320 --> 00:39:06,200
Speaker 3: The same commodity prices being neutral, they've hitten either here

801
00:39:06,360 --> 00:39:09,640
Speaker 3: or their stock markets booming. As I'm going to put

802
00:39:09,680 --> 00:39:12,279
Speaker 3: that neutral because it's a good thing. It's a wealth

803
00:39:12,280 --> 00:39:14,480
Speaker 3: effect and there are good reasons for it. But you know,

804
00:39:14,520 --> 00:39:16,759
Speaker 3: it's not a bubble. In fact, far from I guess

805
00:39:16,800 --> 00:39:18,880
Speaker 3: if stock prices are going up fifty percent, you might

806
00:39:18,920 --> 00:39:19,600
Speaker 3: want to move it.

807
00:39:19,640 --> 00:39:22,600
Speaker 2: But because you're just on that Just what's interesting about

808
00:39:22,600 --> 00:39:24,920
Speaker 2: that when you look at house prices and you look

809
00:39:24,960 --> 00:39:28,120
Speaker 2: at and you look at stocks both.

810
00:39:27,920 --> 00:39:28,840
Speaker 1: Doing very well.

811
00:39:29,560 --> 00:39:31,880
Speaker 2: Both, But the people who benefit from that are the

812
00:39:31,880 --> 00:39:34,640
Speaker 2: people who benefit from actually actually also benefit from a

813
00:39:34,680 --> 00:39:37,680
Speaker 2: higher industry because they're generally speaking older people who are

814
00:39:37,680 --> 00:39:41,719
Speaker 2: retired or have no debt or have debt, and they've

815
00:39:41,719 --> 00:39:44,440
Speaker 2: got additional income and they invested in the stock market

816
00:39:44,480 --> 00:39:48,000
Speaker 2: through super or some other mechanism, and or they they

817
00:39:48,000 --> 00:39:50,640
Speaker 2: are the same people going and buying houses and they're

818
00:39:50,680 --> 00:39:51,440
Speaker 2: the ones keeping.

819
00:39:51,239 --> 00:39:53,399
Speaker 3: They've already got the house. They they probably have a problem.

820
00:39:53,520 --> 00:39:57,120
Speaker 2: Yes, so what's that's very interesting that higher interst rates

821
00:39:57,200 --> 00:39:59,719
Speaker 2: generally speaking suit those people because they've also got money

822
00:39:59,719 --> 00:39:59,960
Speaker 2: into PO.

823
00:40:00,680 --> 00:40:03,560
Speaker 3: That's right, they're now getting four points something percent rather

824
00:40:03,600 --> 00:40:06,160
Speaker 3: than back a few years ago point twenty five or

825
00:40:06,160 --> 00:40:08,800
Speaker 3: whatever it was a low point. So yes, in fact,

826
00:40:09,080 --> 00:40:11,880
Speaker 3: just well, just well, can I just elaborate on that

827
00:40:11,880 --> 00:40:14,680
Speaker 3: when CBA again sort I don't think they're fantasy, but

828
00:40:14,920 --> 00:40:16,640
Speaker 3: they've just actually done some interesting stuff. I think it

829
00:40:16,680 --> 00:40:20,200
Speaker 3: was actually in their company sort of six monthly update.

830
00:40:20,719 --> 00:40:25,960
Speaker 3: They had a analysis of who is doing well by

831
00:40:26,000 --> 00:40:30,080
Speaker 3: age cohort. You know, twenty five to thirty four years old,

832
00:40:30,160 --> 00:40:34,760
Speaker 3: thirty five to forty five, people who are fifty five

833
00:40:34,920 --> 00:40:39,080
Speaker 3: to sixty four, and then sixty five plus. The spending

834
00:40:39,400 --> 00:40:43,480
Speaker 3: is going up on essentials, spending on discretionary holidays going up,

835
00:40:43,880 --> 00:40:47,640
Speaker 3: their savings going up, whereas the younger folks, let's call

836
00:40:47,640 --> 00:40:51,000
Speaker 3: it from twenty five to forty five, spending on essentials

837
00:40:51,040 --> 00:40:54,320
Speaker 3: is steady. By definition, you've got to spend it on essentials,

838
00:40:54,480 --> 00:40:58,520
Speaker 3: discretionary spending down, savings down, and they're the ones that

839
00:40:58,560 --> 00:41:02,040
Speaker 3: are being hit by these So your point is absolutely

840
00:41:02,080 --> 00:41:06,399
Speaker 3: spot on that while we have about it, if you've

841
00:41:06,480 --> 00:41:09,279
Speaker 3: owned your house, you've got money in super you're loving

842
00:41:09,360 --> 00:41:11,799
Speaker 3: high interstrates. If you're a young person with a big

843
00:41:11,840 --> 00:41:13,879
Speaker 3: mortgage that you took out a couple of years ago,

844
00:41:14,040 --> 00:41:16,160
Speaker 3: and you've sort of got the cost of living issues

845
00:41:16,200 --> 00:41:17,839
Speaker 3: and you've got a couple of kids at school, you've

846
00:41:17,840 --> 00:41:20,440
Speaker 3: got a car and all those other things, you know,

847
00:41:20,520 --> 00:41:25,200
Speaker 3: your superannuation still decades away. You're thinking what's going on here.

848
00:41:25,960 --> 00:41:29,040
Speaker 2: That's a parallel economy here, which is unfortunately, you know,

849
00:41:29,160 --> 00:41:33,160
Speaker 2: interest rate changes effect not have a negative effect on

850
00:41:33,160 --> 00:41:34,640
Speaker 2: one part of the economy, have a positive effect on

851
00:41:34,680 --> 00:41:35,440
Speaker 2: the other part of the economy.

852
00:41:35,440 --> 00:41:37,919
Speaker 1: Correct and run they're about a third third each.

853
00:41:38,520 --> 00:41:40,959
Speaker 3: Yes, funnily enough it correct It is exactly.

854
00:41:40,680 --> 00:41:43,480
Speaker 1: And man Man I sort of anecdotally.

855
00:41:43,560 --> 00:41:46,000
Speaker 2: You go to the airport any day of the week,

856
00:41:46,280 --> 00:41:50,360
Speaker 2: in which I do every week, traveling to the Gold

857
00:41:50,360 --> 00:41:53,919
Speaker 2: Coast or Brisbane, it's all folk over fifty five.

858
00:41:54,480 --> 00:41:56,600
Speaker 3: Yeah, not many young folks, it's all they're.

859
00:41:56,440 --> 00:41:58,480
Speaker 1: All going on holidays, all going to Darwa.

860
00:41:58,840 --> 00:42:01,680
Speaker 3: The coast house or the holod home. Yeah, it's a

861
00:42:01,760 --> 00:42:02,640
Speaker 3: couple of weeks holiday.

862
00:42:03,640 --> 00:42:03,799
Speaker 2: Yeah.

863
00:42:03,840 --> 00:42:04,040
Speaker 3: Yeah.

864
00:42:04,320 --> 00:42:07,120
Speaker 2: And they're the ones who spend money and buy airline

865
00:42:07,120 --> 00:42:09,480
Speaker 2: tickets and airlines airlines that can put the price up

866
00:42:09,480 --> 00:42:12,440
Speaker 2: because they can surge them a surge price, and you know,

867
00:42:12,520 --> 00:42:14,680
Speaker 2: and the matter, all that stuff contributes to inflation, is

868
00:42:14,760 --> 00:42:18,080
Speaker 2: my point. And what happens is those people don't mind

869
00:42:18,120 --> 00:42:20,799
Speaker 2: if inflation goes hi because their interest rates going better.

870
00:42:20,800 --> 00:42:24,279
Speaker 2: They're earning more money and got less debt. But the

871
00:42:24,320 --> 00:42:28,759
Speaker 2: problem is they're fueling let's call it, putting people in

872
00:42:28,800 --> 00:42:32,320
Speaker 2: the boyhouse who actually got a mortgage, who are younger, who.

873
00:42:32,160 --> 00:42:35,120
Speaker 3: Are working their tails of correct pay their mortgage. Yeah,

874
00:42:35,360 --> 00:42:37,640
Speaker 3: got other costs. If you're old, your kids have probably

875
00:42:37,680 --> 00:42:40,800
Speaker 3: moved out, you know, and you've got very few expenses.

876
00:42:40,880 --> 00:42:41,359
Speaker 1: Yeah, you've got.

877
00:42:41,560 --> 00:42:43,359
Speaker 2: And you're not you're not as affected by the cost

878
00:42:43,400 --> 00:42:45,040
Speaker 2: of living going up as you would if you're younger

879
00:42:45,040 --> 00:42:48,640
Speaker 2: and your kids. Yeah, yeah, you have to close every

880
00:42:48,719 --> 00:42:50,560
Speaker 2: every six months because the kids are growing.

881
00:42:51,000 --> 00:42:54,080
Speaker 1: But it's it's and I and I and I.

882
00:42:54,080 --> 00:42:55,840
Speaker 2: If we could just go back to where we're starting

883
00:42:55,880 --> 00:42:59,880
Speaker 2: in the current rates. We know that the restricted restrict putting,

884
00:43:00,600 --> 00:43:02,160
Speaker 2: but if we could just go back to where we're

885
00:43:02,160 --> 00:43:07,560
Speaker 2: talking about before, cookie like, it's you know, the RBA's

886
00:43:07,680 --> 00:43:12,080
Speaker 2: mandate is often referred to as a blund instry.

887
00:43:12,160 --> 00:43:16,200
Speaker 1: We get all that, But.

888
00:43:14,640 --> 00:43:17,840
Speaker 2: In terms of being hawkish, I guess they've got to

889
00:43:17,880 --> 00:43:20,480
Speaker 2: take their put blinkers on and not think about who's

890
00:43:20,520 --> 00:43:22,520
Speaker 2: actually suffering. I mean, you and I sort of seeing

891
00:43:22,560 --> 00:43:24,600
Speaker 2: here to worry about mortgage holders, et cetera. And maybe

892
00:43:24,719 --> 00:43:26,759
Speaker 2: they should have had a rate reduction on the eighth

893
00:43:26,760 --> 00:43:27,359
Speaker 2: of July and.

894
00:43:27,280 --> 00:43:28,200
Speaker 1: Blah blah blah.

895
00:43:28,239 --> 00:43:31,880
Speaker 2: But I guess they've got to just be data driven

896
00:43:32,160 --> 00:43:34,360
Speaker 2: and what and we're only really interested. We're not interested

897
00:43:34,360 --> 00:43:38,760
Speaker 2: in any particular cohorting economy. We're only interested in the data.

898
00:43:38,960 --> 00:43:41,360
Speaker 2: To the extender says that the GDP inflation and or

899
00:43:41,400 --> 00:43:43,920
Speaker 2: labor markets are out of whack.

900
00:43:44,440 --> 00:43:46,839
Speaker 3: And I think your point is very validate. And the

901
00:43:46,840 --> 00:43:49,399
Speaker 3: governor acknowledges that there are some people doing it very tough,

902
00:43:49,440 --> 00:43:51,880
Speaker 3: you know, to her credit and to her big credit,

903
00:43:52,000 --> 00:43:54,680
Speaker 3: like seriously, because she occasionally gets asked that the press

904
00:43:54,719 --> 00:43:59,000
Speaker 3: conferences and other parliamentary conferences whatever, you know, that are

905
00:43:59,000 --> 00:44:01,760
Speaker 3: people hurting. Says, yes are but he says, she says,

906
00:44:01,920 --> 00:44:06,759
Speaker 3: I can't have interst rates set for young people or

907
00:44:06,800 --> 00:44:08,360
Speaker 3: for old people at a different rate. And it's a

908
00:44:08,400 --> 00:44:11,799
Speaker 3: little bit like the state by state breakdown. Victoria should

909
00:44:11,840 --> 00:44:14,760
Speaker 3: have a rate cut unambiguously way, if you're just setting

910
00:44:14,760 --> 00:44:16,919
Speaker 3: in straight, should probably have a rate hike, to be honest,

911
00:44:16,960 --> 00:44:21,000
Speaker 3: because they're booming alas it's one interest rate for the

912
00:44:21,000 --> 00:44:24,080
Speaker 3: whole country. And so this this complicates the RBA's job

913
00:44:24,120 --> 00:44:25,480
Speaker 3: just by the way to give to cut.

914
00:44:25,320 --> 00:44:25,960
Speaker 1: Them some slack.

915
00:44:26,480 --> 00:44:28,319
Speaker 3: You know, they're sitting there and they're hearing from their

916
00:44:28,400 --> 00:44:31,239
Speaker 3: way context. Oh, you know, the house prices are booming

917
00:44:31,280 --> 00:44:34,080
Speaker 3: and the economy is booming. I can't find workers because

918
00:44:34,120 --> 00:44:36,799
Speaker 3: the mining sector is doing pretty well and you know

919
00:44:36,880 --> 00:44:39,440
Speaker 3: all that, so a rate cut and you go to

920
00:44:39,480 --> 00:44:41,279
Speaker 3: Victoria and thinking, oh geez, you know, things are tough.

921
00:44:41,320 --> 00:44:44,160
Speaker 3: You know the government governments sort of screwed up fiscal policy.

922
00:44:44,200 --> 00:44:47,319
Speaker 3: They're going to hike taxes there and land taxes and

923
00:44:47,360 --> 00:44:50,319
Speaker 3: property taxes. Victoria. Yeah, you need a rate cut. So

924
00:44:50,880 --> 00:44:53,520
Speaker 3: that's what they're also balancing. It's not just you know

925
00:44:53,560 --> 00:44:59,879
Speaker 3: this macro all of Australia GDP, employment and inflation. They

926
00:45:00,120 --> 00:45:03,160
Speaker 3: here from different businesses and even different businesses are doing

927
00:45:03,239 --> 00:45:06,120
Speaker 3: differently as well, of course, so they're hearing from geographic

928
00:45:06,320 --> 00:45:10,920
Speaker 3: differences Wa booming Victorian Tazzy week for example. And then

929
00:45:10,960 --> 00:45:13,880
Speaker 3: they're hearing on an industry basis that housing construction we

930
00:45:13,960 --> 00:45:18,120
Speaker 3: are still going pretty tough at the minute, Retailing, hospitality

931
00:45:18,160 --> 00:45:21,400
Speaker 3: is pretty tough. So they're hearing from a very different

932
00:45:21,440 --> 00:45:24,520
Speaker 3: story depending on what you do. Whereas the services sector,

933
00:45:25,040 --> 00:45:27,640
Speaker 3: health services booming, you know, that's the one where we've

934
00:45:27,680 --> 00:45:33,080
Speaker 3: got that incredible growth in government generated employment. And even

935
00:45:33,080 --> 00:45:36,000
Speaker 3: if it's a private sector like childcare centers or whatever,

936
00:45:36,280 --> 00:45:40,520
Speaker 3: it's still the government that's fueling that. Demands a public servant,

937
00:45:40,840 --> 00:45:41,839
Speaker 3: it's the government.

938
00:45:42,280 --> 00:45:47,120
Speaker 2: Balance on that, so therefore a more good company see

939
00:45:47,120 --> 00:45:48,200
Speaker 2: with your predictions in a second.

940
00:45:48,200 --> 00:45:53,440
Speaker 1: But therefore, do you think that the whole monetary policy

941
00:45:53,480 --> 00:45:58,279
Speaker 1: then is a bit of a fiction given what you

942
00:45:58,360 --> 00:45:58,800
Speaker 1: just said.

943
00:45:59,239 --> 00:46:01,520
Speaker 3: Look, Mountray Pols is really important, you know it.

944
00:46:03,760 --> 00:46:04,200
Speaker 1: You know that.

945
00:46:04,239 --> 00:46:07,240
Speaker 2: I mean that the way it's styled manage your policy

946
00:46:07,239 --> 00:46:10,080
Speaker 2: important and the way we do it because given what might.

947
00:46:09,920 --> 00:46:13,040
Speaker 3: Be one it's bad for w A and what's good

948
00:46:13,120 --> 00:46:14,920
Speaker 3: for retailing is bad for construction.

949
00:46:14,960 --> 00:46:17,440
Speaker 1: Well, what's good for an older person for a younger person?

950
00:46:17,960 --> 00:46:22,280
Speaker 3: Alas Ah, You've just opened a big can of words

951
00:46:22,840 --> 00:46:26,479
Speaker 3: which you like to do that. I know that's where

952
00:46:27,160 --> 00:46:30,520
Speaker 3: government policy comes in the IBA. Let them set interest

953
00:46:30,560 --> 00:46:35,040
Speaker 3: rates for the macro economy. We're talking fiscal policy, tax

954
00:46:35,200 --> 00:46:38,200
Speaker 3: and spending. Where does the government including state governments by

955
00:46:38,239 --> 00:46:40,440
Speaker 3: the way, not just the federal government, where do they

956
00:46:40,480 --> 00:46:42,759
Speaker 3: raise revenue and where do they spend.

957
00:46:42,560 --> 00:46:44,320
Speaker 1: That revenue or where they give relief.

958
00:46:44,920 --> 00:46:47,560
Speaker 3: So in theory, and this is sort of part of this,

959
00:46:47,640 --> 00:46:49,840
Speaker 3: I'll talk about the intergenerational one because that's sort of

960
00:46:49,880 --> 00:46:54,400
Speaker 3: pretty clear to I think most people. I'll be blunt,

961
00:46:54,520 --> 00:46:56,879
Speaker 3: and this is general because some people are old people

962
00:46:56,920 --> 00:46:59,440
Speaker 3: are doing it tough, and some young people are killing

963
00:46:59,680 --> 00:47:02,399
Speaker 3: killing But in a very broad sense from the data

964
00:47:02,440 --> 00:47:07,279
Speaker 3: that we've got most old superannuents who've got truckloads of

965
00:47:07,280 --> 00:47:09,640
Speaker 3: money and superannuation, who own their house, they don't need

966
00:47:09,640 --> 00:47:14,840
Speaker 3: any support. They're fine, as was just saying, a young family,

967
00:47:15,360 --> 00:47:19,960
Speaker 3: couple of kids, big mortgage, good jobs, so they're doing well.

968
00:47:20,960 --> 00:47:24,320
Speaker 3: They're the ones that a rounder financial pressure. Let alone

969
00:47:24,360 --> 00:47:29,080
Speaker 3: someone who's renting, who's got maybe a modest income. They're

970
00:47:29,120 --> 00:47:32,279
Speaker 3: paying so much more for their goods and services every week,

971
00:47:32,320 --> 00:47:35,319
Speaker 3: their insurance and their and their body corporate fees and

972
00:47:35,360 --> 00:47:39,160
Speaker 3: their rent and food and groceries and all this other stuff.

973
00:47:39,200 --> 00:47:40,560
Speaker 3: I haven't got much of a pay rise the last

974
00:47:40,600 --> 00:47:42,200
Speaker 3: couple of years. They're the ones that are under a

975
00:47:42,239 --> 00:47:46,000
Speaker 3: lot of pressure too, and they tend to correct and

976
00:47:46,040 --> 00:47:49,360
Speaker 3: they tend to be the younger age cohorts. What do

977
00:47:49,400 --> 00:47:50,759
Speaker 3: you do about? So that's where the government's got to

978
00:47:50,800 --> 00:47:53,680
Speaker 3: do things like and look the what do we call it?

979
00:47:53,719 --> 00:47:57,520
Speaker 3: That relief on hextat twenty percent and extt the other day.

980
00:47:58,200 --> 00:48:01,160
Speaker 3: Fair enough? Yeah, I think that was actually helpful and

981
00:48:01,600 --> 00:48:04,400
Speaker 3: it helps some of those people qualify for a mortgage.

982
00:48:04,400 --> 00:48:07,000
Speaker 3: Down the track, A little bit. So it's not the worst. Look,

983
00:48:07,000 --> 00:48:08,480
Speaker 3: it's not the policy that i'd have is number one

984
00:48:08,560 --> 00:48:10,760
Speaker 3: is the best policy I've ever seen, far from it.

985
00:48:10,800 --> 00:48:12,960
Speaker 3: But those sort of things are for young people have

986
00:48:13,000 --> 00:48:15,319
Speaker 3: got hex step, you know. So it's sort of those

987
00:48:15,360 --> 00:48:17,960
Speaker 3: sort of things that can tilt the balance. And when

988
00:48:17,960 --> 00:48:20,879
Speaker 3: you're saying we should be looking after the people who

989
00:48:20,880 --> 00:48:24,160
Speaker 3: are exposed to the tough economic times and maybe not

990
00:48:24,320 --> 00:48:28,120
Speaker 3: give so much support to those who are doing fine,

991
00:48:28,840 --> 00:48:30,640
Speaker 3: it's the governments that do it.

992
00:48:30,719 --> 00:48:33,560
Speaker 1: That's the government's job, correct, not the the RBA.

993
00:48:33,640 --> 00:48:37,520
Speaker 3: Justinustrates, they're on inflation and full employment, right, so that's

994
00:48:37,520 --> 00:48:38,040
Speaker 3: how it should be.

995
00:48:38,080 --> 00:48:40,720
Speaker 1: So the RBA is, you're right, it seems to be corrected.

996
00:48:41,719 --> 00:48:43,560
Speaker 2: Be hawkish based on the data because you've got much

997
00:48:43,560 --> 00:48:44,960
Speaker 2: but better data than you've ever had before.

998
00:48:45,320 --> 00:48:46,560
Speaker 1: And government your job.

999
00:48:46,640 --> 00:48:49,000
Speaker 2: And by the way, the RBA, not so much this governor,

1000
00:48:49,040 --> 00:48:52,480
Speaker 2: but previous governors have said, you know, the government's fiscal

1001
00:48:52,480 --> 00:48:54,480
Speaker 2: policy is not doing any to help things.

1002
00:48:54,640 --> 00:48:55,720
Speaker 3: They have said that in the past.

1003
00:48:55,760 --> 00:48:58,800
Speaker 2: Correct, And I remember you probably remember this too, but

1004
00:48:58,840 --> 00:49:00,000
Speaker 2: I don't remember who it was. It might have been,

1005
00:49:00,360 --> 00:49:02,399
Speaker 2: I don't know it was Frank Crean or Simon Crean,

1006
00:49:02,800 --> 00:49:06,160
Speaker 2: but one of them was treasurer in the mid eighties

1007
00:49:06,200 --> 00:49:06,720
Speaker 2: under Hawk.

1008
00:49:07,160 --> 00:49:08,120
Speaker 1: Yeah, would that be.

1009
00:49:08,360 --> 00:49:11,640
Speaker 3: It would be I think Frank was GoF Whitlam, and

1010
00:49:11,680 --> 00:49:14,840
Speaker 3: I think Simon might have been in the eighties.

1011
00:49:14,560 --> 00:49:16,200
Speaker 1: Right, so well, either one of them.

1012
00:49:17,400 --> 00:49:19,880
Speaker 2: Actually I don't remember which, whether it was Goff's period

1013
00:49:19,920 --> 00:49:23,239
Speaker 2: or whether it was Bob's period, Bob Hawk's period, but

1014
00:49:23,920 --> 00:49:28,600
Speaker 2: I remember very distinctly because I had one people who

1015
00:49:28,640 --> 00:49:30,840
Speaker 2: weren't earning a certain amount of money, who had a

1016
00:49:30,840 --> 00:49:34,520
Speaker 2: mortgage got a tax rebate of the interest paid on

1017
00:49:34,560 --> 00:49:37,160
Speaker 2: their mortgage, and I think it was up to one

1018
00:49:37,200 --> 00:49:40,680
Speaker 2: thousand bucks. And what it was is it was me.

1019
00:49:40,760 --> 00:49:43,880
Speaker 2: It's tested and I was one of the people that

1020
00:49:43,960 --> 00:49:47,120
Speaker 2: got it. I got a tax refund of one thousand dollars.

1021
00:49:47,480 --> 00:49:49,759
Speaker 2: And I remember at the time thinking to myself, that's

1022
00:49:49,760 --> 00:49:50,480
Speaker 2: a bloody.

1023
00:49:50,160 --> 00:49:51,720
Speaker 1: Good physical policy. That's a great policy.

1024
00:49:51,719 --> 00:49:53,440
Speaker 2: Because I was quite interesting economics at the time, but

1025
00:49:54,040 --> 00:49:57,000
Speaker 2: I thought that's very good because I know that I

1026
00:49:57,120 --> 00:50:00,320
Speaker 2: need that risk, I need that relief now because the

1027
00:50:00,320 --> 00:50:00,920
Speaker 2: interest rates.

1028
00:50:00,760 --> 00:50:01,359
Speaker 1: Were quite high.

1029
00:50:01,440 --> 00:50:04,080
Speaker 2: We're going through we're going through an inflationary period, and

1030
00:50:04,120 --> 00:50:05,360
Speaker 2: you know, both both golf and.

1031
00:50:05,560 --> 00:50:07,960
Speaker 3: In those days we had double digit interstrates can't whether

1032
00:50:07,960 --> 00:50:09,239
Speaker 3: it's seventies were.

1033
00:50:09,760 --> 00:50:10,880
Speaker 2: If you remember it was off the back a big

1034
00:50:10,920 --> 00:50:14,440
Speaker 2: spending by both those guys. It was incredible and and

1035
00:50:14,560 --> 00:50:17,640
Speaker 2: you know and that as we know, I think you

1036
00:50:17,719 --> 00:50:20,240
Speaker 2: and I've said many times, government's created inflation by putting

1037
00:50:20,280 --> 00:50:22,080
Speaker 2: money in the system. And you know, for all the

1038
00:50:22,120 --> 00:50:23,840
Speaker 2: good reasons they've got to do it. We had to

1039
00:50:23,840 --> 00:50:25,640
Speaker 2: do it during COVID et cetera. But you've got to

1040
00:50:25,680 --> 00:50:27,759
Speaker 2: do these things. But people will spend it when they've

1041
00:50:27,760 --> 00:50:31,600
Speaker 2: got it, and that will create inflation because vendors will say, vendors,

1042
00:50:31,680 --> 00:50:33,719
Speaker 2: merchants will say, wow, they've all got money. I'm going

1043
00:50:33,719 --> 00:50:35,080
Speaker 2: to put my price up because i haven't been able

1044
00:50:35,120 --> 00:50:36,160
Speaker 2: to do it for a long time. And that's what

1045
00:50:36,280 --> 00:50:38,319
Speaker 2: crazy inflation. But I remember they had to bring interest

1046
00:50:38,400 --> 00:50:40,840
Speaker 2: rates in to kill it, and you know that inflation,

1047
00:50:41,040 --> 00:50:42,880
Speaker 2: which they did. And I was I had a mortgage

1048
00:50:42,960 --> 00:50:45,719
Speaker 2: and I was one of those people who's when means

1049
00:50:45,760 --> 00:50:49,640
Speaker 2: tested was entitled was entime to get I'm pretty sure it.

1050
00:50:49,640 --> 00:50:51,160
Speaker 1: Was either eight hundred dollars one thousand.

1051
00:50:50,920 --> 00:50:55,000
Speaker 3: Bucks amount of money and this.

1052
00:50:55,400 --> 00:50:57,360
Speaker 1: And it was and it was a relief.

1053
00:50:57,800 --> 00:51:00,160
Speaker 2: It was great when that check came in mate was

1054
00:51:00,160 --> 00:51:02,880
Speaker 2: a big deal for me, and I just wonder, is

1055
00:51:02,920 --> 00:51:05,279
Speaker 2: that the sort of policy you like the thought of it?

1056
00:51:05,320 --> 00:51:08,440
Speaker 3: As an economist, I'll turn it on its head. I

1057
00:51:08,520 --> 00:51:11,239
Speaker 3: don't like first home bier grants. No, no, this was,

1058
00:51:11,480 --> 00:51:14,000
Speaker 3: But I'm saying that that that way they try to

1059
00:51:14,000 --> 00:51:17,320
Speaker 3: help house price green. Whereas if you've got a mortgage

1060
00:51:17,360 --> 00:51:20,279
Speaker 3: and you're under financial stress, and it's qualified because again

1061
00:51:22,239 --> 00:51:24,759
Speaker 3: higher interst rates are meant to cool the economy down,

1062
00:51:25,239 --> 00:51:29,760
Speaker 3: but you don't want to smash every mash those most vulnerable.

1063
00:51:29,800 --> 00:51:32,560
Speaker 3: Let's just say in the bottom quartile of vulnerability.

1064
00:51:32,640 --> 00:51:32,960
Speaker 2: That was me.

1065
00:51:33,120 --> 00:51:35,960
Speaker 3: So, look, some people have got a mortgage and they're fine.

1066
00:51:36,120 --> 00:51:38,719
Speaker 3: There's a lot of mortgage holders are absolutely fine. They

1067
00:51:38,800 --> 00:51:40,759
Speaker 3: took it out years ago, they paid half it off,

1068
00:51:41,080 --> 00:51:43,239
Speaker 3: they've got to pay rise since and so they don't

1069
00:51:43,320 --> 00:51:44,520
Speaker 3: need that help.

1070
00:51:44,880 --> 00:51:48,640
Speaker 1: Means testing it is part of the thing.

1071
00:51:48,920 --> 00:51:51,759
Speaker 3: Look, I have to think about that a whole lot more,

1072
00:51:51,800 --> 00:51:54,560
Speaker 3: but I don't mind it. I think that there's something

1073
00:51:55,160 --> 00:51:58,960
Speaker 3: in that because I like the relief issue that we

1074
00:51:59,200 --> 00:52:01,719
Speaker 3: were just talking about for Heck's stet. Clear enough, it's

1075
00:52:01,719 --> 00:52:04,080
Speaker 3: could policy helps some young people produce their hex stet

1076
00:52:04,080 --> 00:52:07,080
Speaker 3: and all the rest of it. Uh So mortgage relief,

1077
00:52:08,000 --> 00:52:09,800
Speaker 3: I'll have to think about that, but I quite like it.

1078
00:52:10,080 --> 00:52:14,560
Speaker 3: I'm pretty sure through Love which one of the history books.

1079
00:52:14,560 --> 00:52:15,840
Speaker 3: So I've got a whole lot on my shelf at

1080
00:52:15,880 --> 00:52:17,400
Speaker 3: home in the years of Hawk and all that.

1081
00:52:18,000 --> 00:52:20,120
Speaker 1: Because it wasn't as if I was because I was.

1082
00:52:21,640 --> 00:52:23,759
Speaker 2: One of those people like just about every dollar I

1083
00:52:23,880 --> 00:52:27,080
Speaker 2: earned went to pay for my family or or or

1084
00:52:27,360 --> 00:52:27,960
Speaker 2: my mortgage.

1085
00:52:28,040 --> 00:52:28,680
Speaker 1: That's that was it.

1086
00:52:30,239 --> 00:52:32,440
Speaker 2: I wasn't one of those people's contributing inflation because I

1087
00:52:32,520 --> 00:52:34,319
Speaker 2: wasn't spending like a drunken sailor, because I had nothing

1088
00:52:34,840 --> 00:52:35,160
Speaker 2: left over.

1089
00:52:35,320 --> 00:52:38,000
Speaker 1: So I needed that thousand bucks. And that was a

1090
00:52:38,040 --> 00:52:40,759
Speaker 1: holiday for me. I take my whole family on holiday.

1091
00:52:40,520 --> 00:52:43,920
Speaker 2: And do something nice, so important, and we probably just

1092
00:52:44,040 --> 00:52:47,399
Speaker 2: go down to you know, down to Bateman's Bay or something.

1093
00:52:48,120 --> 00:52:52,840
Speaker 1: We weren't going to mollyk It was mollybook actually read.

1094
00:52:54,239 --> 00:52:56,520
Speaker 3: Put over all the kids in the came Christmas that

1095
00:52:56,680 --> 00:52:58,040
Speaker 3: we're heading for Christmas.

1096
00:52:58,320 --> 00:52:58,759
Speaker 1: I loved it.

1097
00:52:59,560 --> 00:53:02,160
Speaker 2: We paid render the house or something would have happened.

1098
00:53:02,200 --> 00:53:06,880
Speaker 2: But that's that just I'm just running. Whether that's to

1099
00:53:06,960 --> 00:53:10,239
Speaker 2: our audience. That's where the government comes in.

1100
00:53:10,400 --> 00:53:11,720
Speaker 1: Fiscal policy is really.

1101
00:53:11,600 --> 00:53:14,560
Speaker 3: Poorant to help. And it's even the debate about superannuation

1102
00:53:14,719 --> 00:53:18,600
Speaker 3: now without getting into the nitty gritty of taxing, unrealized

1103
00:53:18,600 --> 00:53:22,080
Speaker 3: gains whatever, there are some people who've got bucket loads

1104
00:53:22,120 --> 00:53:24,560
Speaker 3: of money in the super. They don't need another tax break. Now,

1105
00:53:24,600 --> 00:53:26,120
Speaker 3: whether this is the right way to repair it, we'll

1106
00:53:26,160 --> 00:53:28,479
Speaker 3: leave that for another day. But you know, you don't

1107
00:53:28,560 --> 00:53:31,920
Speaker 3: need to add to the generosity to super innovation. Put

1108
00:53:31,960 --> 00:53:32,319
Speaker 3: it that way.

1109
00:53:32,400 --> 00:53:33,200
Speaker 1: Yeah, I agree that.

1110
00:53:33,920 --> 00:53:37,480
Speaker 2: Well, Coogie, we've covered a lot of problems, but made

1111
00:53:37,560 --> 00:53:38,960
Speaker 2: where do you think that What do you think is

1112
00:53:38,960 --> 00:53:39,799
Speaker 2: going to happen next week?

1113
00:53:39,840 --> 00:53:43,120
Speaker 3: Next week? Look, they're going to go. They're probably going

1114
00:53:43,160 --> 00:53:44,960
Speaker 3: to go twenty five points. They have to. And I think,

1115
00:53:45,000 --> 00:53:47,359
Speaker 3: as Michelle Bullock said last time, there was a question

1116
00:53:47,400 --> 00:53:51,480
Speaker 3: of timing, not direction. In the period since the Shock

1117
00:53:51,920 --> 00:53:55,080
Speaker 3: Onhold decision back in July, as we just said, we've

1118
00:53:55,120 --> 00:53:57,680
Speaker 3: had the unemployed rate going up from four point one

1119
00:53:57,719 --> 00:54:01,160
Speaker 3: to four point three percent. We've had the trimm demean

1120
00:54:01,280 --> 00:54:04,640
Speaker 3: going from two point nine to two point seven. So

1121
00:54:04,800 --> 00:54:07,680
Speaker 3: both are heading in the I'll say the right direction

1122
00:54:07,760 --> 00:54:08,920
Speaker 3: for a rate cut. You know, we don't want to

1123
00:54:08,920 --> 00:54:11,719
Speaker 3: employment to go up. But so as the board sits

1124
00:54:11,760 --> 00:54:15,680
Speaker 3: there next week and mulls over this sort of checklist

1125
00:54:15,760 --> 00:54:18,440
Speaker 3: on the economy. Plus they're modeling, plus they look at

1126
00:54:18,440 --> 00:54:22,600
Speaker 3: the global economy twenty five. What again, it's one of

1127
00:54:22,640 --> 00:54:26,000
Speaker 3: those ones. What she says will probably be more important

1128
00:54:26,360 --> 00:54:30,920
Speaker 3: than what Michelle Bullock does, and so the statement that

1129
00:54:31,000 --> 00:54:34,000
Speaker 3: she puts out fine will read that there is the

1130
00:54:34,080 --> 00:54:36,800
Speaker 3: monetary policy statement, which is the sixty or seventy pages

1131
00:54:36,840 --> 00:54:40,759
Speaker 3: of analysis of the economy with updated forecasts, So we'll

1132
00:54:40,760 --> 00:54:43,479
Speaker 3: pour over those. Plus of course she has the press

1133
00:54:43,480 --> 00:54:47,880
Speaker 3: conference at three point thirty Sydney time, where and I

1134
00:54:47,960 --> 00:54:50,399
Speaker 3: must say, the questions now better than the very first

1135
00:54:50,560 --> 00:54:53,080
Speaker 3: couple that she did, So the journals have've learnt to

1136
00:54:53,120 --> 00:54:56,080
Speaker 3: ask good questions. She'll be asked, and I dare say

1137
00:54:56,160 --> 00:54:58,880
Speaker 3: what she might say, or hint at and the board

1138
00:54:58,960 --> 00:55:01,200
Speaker 3: papers and all this other stuff. We'll hint out. Monetary

1139
00:55:01,200 --> 00:55:04,640
Speaker 3: policy statement will hint out, here's the third rate cut

1140
00:55:04,680 --> 00:55:10,200
Speaker 3: in the cycle. We are happy with that, but we'll

1141
00:55:10,320 --> 00:55:15,239
Speaker 3: need more information on inflation, unemployment, economic growth before we

1142
00:55:15,360 --> 00:55:18,719
Speaker 3: move again. So it'll be a here's the rate cut,

1143
00:55:19,200 --> 00:55:23,600
Speaker 3: and don't expect one next time unless the data tells

1144
00:55:23,680 --> 00:55:25,279
Speaker 3: us so. Again, getting back to that point that we

1145
00:55:25,400 --> 00:55:27,800
Speaker 3: made a short while ago about data dependency and we

1146
00:55:27,920 --> 00:55:31,600
Speaker 3: look at data rather than preemptiveness. So it'll be one

1147
00:55:31,600 --> 00:55:34,760
Speaker 3: of those ones where and if the data is crappy,

1148
00:55:35,040 --> 00:55:37,800
Speaker 3: they'll cut again. But if data is okay, you know,

1149
00:55:37,800 --> 00:55:40,719
Speaker 3: it doesn't deteriorate, and there's a bit of a more

1150
00:55:40,760 --> 00:55:44,280
Speaker 3: optimism and consumer spending and something, they'll be on hold

1151
00:55:44,480 --> 00:55:46,400
Speaker 3: for a few more months.

1152
00:55:47,000 --> 00:55:49,640
Speaker 1: So it's interesting you said.

1153
00:55:51,120 --> 00:55:55,040
Speaker 2: Series, and we'll finish off on this, but I ask

1154
00:55:55,080 --> 00:55:57,960
Speaker 2: you a view on it. But generally speaking, as you

1155
00:55:58,000 --> 00:56:00,800
Speaker 2: and I noble up to two thousand and ten, anyway,

1156
00:56:01,800 --> 00:56:05,400
Speaker 2: the series were five up, six down over a period

1157
00:56:05,440 --> 00:56:08,920
Speaker 2: of a couple of years, and it was always considered

1158
00:56:08,960 --> 00:56:10,920
Speaker 2: to be there will be a series of rate reductions.

1159
00:56:10,960 --> 00:56:12,120
Speaker 1: It didn't. You just didn't get one.

1160
00:56:15,040 --> 00:56:18,520
Speaker 2: Do you think the series we have a structural change

1161
00:56:18,560 --> 00:56:20,200
Speaker 2: these days and then we are not going to see

1162
00:56:20,280 --> 00:56:22,160
Speaker 2: series like we normally see.

1163
00:56:22,960 --> 00:56:26,400
Speaker 3: I think we. I think you're right, and even if

1164
00:56:26,440 --> 00:56:29,879
Speaker 3: you think back pre pandemic, I'll just have to double

1165
00:56:29,960 --> 00:56:32,719
Speaker 3: check my dates. But something from like twy and ten

1166
00:56:33,360 --> 00:56:37,640
Speaker 3: to twenty nineteen, there were few the only direction rates

1167
00:56:37,719 --> 00:56:39,399
Speaker 3: was down, and there were periods of two years where

1168
00:56:39,400 --> 00:56:41,440
Speaker 3: they did nothing. Yeah, correct, they leven't steady for two years,

1169
00:56:41,600 --> 00:56:43,439
Speaker 3: there'd be one. They'd live for eight any more months.

1170
00:56:44,040 --> 00:56:46,120
Speaker 3: So that was that. That was the start of that

1171
00:56:46,520 --> 00:56:48,359
Speaker 3: five up, five down or six down, you know, five

1172
00:56:48,480 --> 00:56:50,960
Speaker 3: or six up or down. And that was the nice

1173
00:56:51,000 --> 00:56:54,000
Speaker 3: cycle that period that was post global financial crisis and

1174
00:56:54,200 --> 00:56:58,000
Speaker 3: really low inflation back then. Pandemic came along that sort

1175
00:56:58,000 --> 00:57:02,279
Speaker 3: of stirred up all the economics of the world, and

1176
00:57:02,320 --> 00:57:05,960
Speaker 3: then we had what was it, well, the equivalent of

1177
00:57:06,040 --> 00:57:08,640
Speaker 3: thirteen twenty five point rate hikes, four hundred and twenty

1178
00:57:08,680 --> 00:57:10,839
Speaker 3: five points of rate hikes in that tightening cycle from

1179
00:57:10,920 --> 00:57:13,359
Speaker 3: twenty twenty two to the end of twenty twenty three.

1180
00:57:13,880 --> 00:57:16,200
Speaker 3: So thirteen, it wasn't six or seven, five or six.

1181
00:57:16,800 --> 00:57:19,040
Speaker 3: And I've had two rate cuts and we're not going

1182
00:57:19,080 --> 00:57:20,640
Speaker 3: to get thirteen rate cuts this cycle.

1183
00:57:21,080 --> 00:57:21,360
Speaker 2: No, what.

1184
00:57:22,960 --> 00:57:26,960
Speaker 3: Sincross Sydney Harbor. I cut thirteen back too point one percent.

1185
00:57:28,600 --> 00:57:31,840
Speaker 3: It's going to be spaced out as in duration between

1186
00:57:31,960 --> 00:57:35,200
Speaker 3: moves and very very cautious. I think that's this, and

1187
00:57:35,320 --> 00:57:40,200
Speaker 3: I think that's the methodology, and such is the nature

1188
00:57:40,240 --> 00:57:44,160
Speaker 3: of the economy right now. It's changed the post COVID

1189
00:57:44,320 --> 00:57:49,520
Speaker 3: is that we've got this incredible change. And this is

1190
00:57:49,560 --> 00:57:51,880
Speaker 3: a question that I don't know any answers to. But

1191
00:57:51,960 --> 00:57:56,720
Speaker 3: the artificial intelligence change consequences for employment, consequences for productivity,

1192
00:57:57,240 --> 00:58:00,760
Speaker 3: has consequences for the RBA and the US Federal Reserve

1193
00:58:00,880 --> 00:58:03,840
Speaker 3: and the Bank of England, all central banks and interstraight settings.

1194
00:58:03,880 --> 00:58:05,480
Speaker 3: Because we don't know quite where this is going to

1195
00:58:05,720 --> 00:58:07,120
Speaker 3: go to be frank.

1196
00:58:07,160 --> 00:58:09,960
Speaker 2: And therefore we say to our audience, because you know,

1197
00:58:10,080 --> 00:58:11,720
Speaker 2: in the past we've always said this to the audience.

1198
00:58:12,480 --> 00:58:14,520
Speaker 2: The opposite to what I'm about to say is that

1199
00:58:15,760 --> 00:58:18,360
Speaker 2: we would say, and the money markets are saying there'll

1200
00:58:18,400 --> 00:58:21,440
Speaker 2: be two more rate reductions, or the major banks are

1201
00:58:21,440 --> 00:58:23,440
Speaker 2: saying there'll be two more this year and one more

1202
00:58:23,520 --> 00:58:25,800
Speaker 2: extra or something of that, and I would say to

1203
00:58:25,920 --> 00:58:27,959
Speaker 2: our audience, and I hope, I wonder if you agree

1204
00:58:28,040 --> 00:58:31,640
Speaker 2: or not, don't listen to that stuff anymore, because I

1205
00:58:31,680 --> 00:58:33,480
Speaker 2: think Michelle Bullock's I mean, you can listen to it,

1206
00:58:33,520 --> 00:58:34,400
Speaker 2: but they don't.

1207
00:58:34,480 --> 00:58:36,440
Speaker 1: But don't put too much don't don't put too much

1208
00:58:36,480 --> 00:58:36,880
Speaker 1: weight on it.

1209
00:58:37,080 --> 00:58:40,120
Speaker 3: Don't put your house on it, so to speak. It's interesting.

1210
00:58:40,240 --> 00:58:43,680
Speaker 3: Don't plan with that, oh no, don't. Don't make a

1211
00:58:43,800 --> 00:58:46,400
Speaker 3: decision based on that, And again, and there I say,

1212
00:58:46,400 --> 00:58:48,520
Speaker 3: and I don't mean to be throwing stones at doctor Lowe,

1213
00:58:48,520 --> 00:58:51,439
Speaker 3: but his no rate hikes for three years was also

1214
00:58:51,600 --> 00:58:54,960
Speaker 3: part of the death of that preemptiveness as well, because

1215
00:58:55,000 --> 00:58:58,200
Speaker 3: that hurt the RBA. And and you know, at the

1216
00:58:58,280 --> 00:59:00,640
Speaker 3: time he made it fair enough, endemic and all this

1217
00:59:00,720 --> 00:59:02,600
Speaker 3: other stuff, so I could understand what he was saying.

1218
00:59:03,040 --> 00:59:05,080
Speaker 3: But it turned out to be a mistake, as we

1219
00:59:05,160 --> 00:59:08,280
Speaker 3: all know. And that's the death of why Michelle Bullock

1220
00:59:08,360 --> 00:59:10,120
Speaker 3: is very cautious and when she asked, I can't rull

1221
00:59:10,120 --> 00:59:11,760
Speaker 3: anything in her out, they could up, they could get you.

1222
00:59:12,120 --> 00:59:13,880
Speaker 3: And that's fine because she's learned from that because she

1223
00:59:13,920 --> 00:59:15,840
Speaker 3: was deputy governor at the time, so she was well

1224
00:59:15,880 --> 00:59:20,200
Speaker 3: aware of the flack that that created for the RBA.

1225
00:59:20,720 --> 00:59:22,800
Speaker 3: But I think in addition to that, it's just the

1226
00:59:22,960 --> 00:59:26,080
Speaker 3: dynamics of the economy now that it always changes. But this,

1227
00:59:26,840 --> 00:59:28,440
Speaker 3: and I'm coming to terms with as we all are,

1228
00:59:28,520 --> 00:59:31,000
Speaker 3: artificial intelligence. What's it mean, how's it going to work,

1229
00:59:31,040 --> 00:59:34,040
Speaker 3: what's it what's it mean for jobs, what's it mean

1230
00:59:34,160 --> 00:59:36,960
Speaker 3: for wages growth? What's it mean for inflation? So there's

1231
00:59:37,000 --> 00:59:39,640
Speaker 3: all these unknowns and while you know we were saying

1232
00:59:39,640 --> 00:59:42,080
Speaker 3: before stock markets are booming, you know, and this is

1233
00:59:42,120 --> 00:59:43,840
Speaker 3: when the economy's mediocre.

1234
00:59:44,000 --> 00:59:45,680
Speaker 1: It's very hard to reconcile a lot of this stuff,

1235
00:59:45,840 --> 00:59:46,320
Speaker 1: it is, so.

1236
00:59:46,360 --> 00:59:49,680
Speaker 3: We're seeing some things now and currencies are very different

1237
00:59:49,680 --> 00:59:53,080
Speaker 3: to the US dollar of things. So global capital markets

1238
00:59:53,240 --> 00:59:57,680
Speaker 3: are changing, you know. Again this is sort of really important.

1239
00:59:57,720 --> 01:00:00,240
Speaker 3: Is she for Australia too? For another day too. But

1240
01:00:00,280 --> 01:00:02,880
Speaker 3: we've got getting close to four and a half trillion

1241
01:00:02,960 --> 01:00:06,120
Speaker 3: dollars in superannuation money. I speak to some of the

1242
01:00:06,160 --> 01:00:12,280
Speaker 3: big super funds. They're over their eyeballs in investments in Australia.

1243
01:00:12,320 --> 01:00:14,439
Speaker 3: They can't buy any more Australian assets. They are putting

1244
01:00:14,480 --> 01:00:16,840
Speaker 3: their money into international assets. And it's not just the

1245
01:00:16,960 --> 01:00:19,680
Speaker 3: US or Europe. They're putting money into what we might

1246
01:00:19,760 --> 01:00:25,200
Speaker 3: call emerging markets in you know, Southeast Asia, in South America.

1247
01:00:25,360 --> 01:00:27,400
Speaker 3: You know, some of the some of the opportunities there

1248
01:00:27,400 --> 01:00:31,800
Speaker 3: are incredible, and so that changes the dynamics of the economy. Globalization,

1249
01:00:32,080 --> 01:00:36,040
Speaker 3: globalization for capital markets. And that's and you're throwing the

1250
01:00:36,080 --> 01:00:38,720
Speaker 3: tariff stuff their mark, and so we look at where

1251
01:00:38,760 --> 01:00:42,760
Speaker 3: interstrates are being priced into markets. But as we've seen

1252
01:00:42,840 --> 01:00:45,480
Speaker 3: over the last little while, it's not a good guy

1253
01:00:45,560 --> 01:00:46,520
Speaker 3: to what actually happens.

1254
01:00:46,680 --> 01:00:48,840
Speaker 1: So we might just finish off in this.

1255
01:00:48,880 --> 01:00:51,960
Speaker 2: But late people that need to understand we've got we've

1256
01:00:52,000 --> 01:00:54,080
Speaker 2: gone through in the last company is probably starting a long,

1257
01:00:54,200 --> 01:00:54,960
Speaker 2: many many years ago.

1258
01:00:55,000 --> 01:00:57,360
Speaker 1: But just the last company is structural change.

1259
01:00:58,160 --> 01:01:01,280
Speaker 2: So what we've always known to be the K we

1260
01:01:01,320 --> 01:01:03,320
Speaker 2: shouldn't assume that is going to be the position.

1261
01:01:03,840 --> 01:01:04,760
Speaker 1: That's the bottom line.

1262
01:01:04,880 --> 01:01:07,200
Speaker 3: And I think that's feeding to the RBA thinking we're

1263
01:01:07,240 --> 01:01:09,480
Speaker 3: talking about that before. So the RBA preemptied this maybe

1264
01:01:09,520 --> 01:01:11,400
Speaker 3: back in the day when Glenn Stevens was governorate. You

1265
01:01:11,400 --> 01:01:12,720
Speaker 3: can sort of say, well, if I put rates up,

1266
01:01:12,760 --> 01:01:15,800
Speaker 3: I can see what's going to happen. Now, an interest

1267
01:01:15,880 --> 01:01:19,280
Speaker 3: rate change might not impact the economy like it used

1268
01:01:19,280 --> 01:01:22,560
Speaker 3: to because of an instruct change is not going to

1269
01:01:22,560 --> 01:01:26,800
Speaker 3: affect artificial intelligence take up that's happening. You know, we're

1270
01:01:26,840 --> 01:01:29,080
Speaker 3: not a manufacturing economy that if you put rates up,

1271
01:01:29,080 --> 01:01:31,280
Speaker 3: people to buy less cars, so the current stry slows down.

1272
01:01:31,400 --> 01:01:35,680
Speaker 3: That was easy to work out. But those technological changes

1273
01:01:35,800 --> 01:01:39,520
Speaker 3: are happening. Whether interest rates are zero or ten percent,

1274
01:01:39,600 --> 01:01:42,000
Speaker 3: it doesn't matter and how that, but they do have

1275
01:01:42,080 --> 01:01:45,120
Speaker 3: an impact on the economy and that's what we are

1276
01:01:45,240 --> 01:01:48,640
Speaker 3: all grappling with, including the RBA now in the meantime,

1277
01:01:48,680 --> 01:01:51,400
Speaker 3: that's why they react each month or reach six weeks

1278
01:01:51,480 --> 01:01:52,800
Speaker 3: or eight weeks to what they're going to do.

1279
01:01:53,360 --> 01:01:56,080
Speaker 1: Googy, thanks for muchmad, I'll see you in a month.

1280
01:01:56,000 --> 01:01:56,920
Speaker 3: See month and a bit.

1281
01:01:56,960 --> 01:01:57,840
Speaker 1: Thanks marking mate.

1282
01:01:58,000 --> 01:02:02,360
Speaker 3: Cheers set, take it up, take it