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Speaker 1: Welcome to Fair and Greed the week Ahead. I'm Sean Almer,

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

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

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Speaker 1: k O UK dot com and on X using the

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Speaker 1: handle the Kirk Stephen.

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Speaker 2: Good morning, and a very very good morning to you.

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Speaker 1: Shure you're excited, Steven. It's a massive week for the economy.

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Speaker 2: Oh my goodness. It's the one that we've been waiting

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Speaker 2: for for such a long time. Labor market numbers, wages numbers,

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Speaker 2: an RBA announcement which might be the first change in

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Speaker 2: interest rates in well, it will be about sixteen months

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Speaker 2: in the first cut. Well, if we get it in

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Speaker 2: about four years.

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Speaker 1: Okay, so it's tomorrow. What time tomorrow? Do we get

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Speaker 1: that two thirty eastern summer time? The RBA will have

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Speaker 1: on their website. We have decided to dot dot dot

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Speaker 1: and I think the overwhelming consensus is to cut rates.

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Speaker 1: I think they're they're one or two sort of holdout.

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Speaker 1: You think that you know, they can perhaps a forward

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Speaker 1: to wait a little bit, and what we saw last

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Speaker 1: week with some of that US inflation numbers might just

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Speaker 1: give them a little bit of a pause for thought,

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Speaker 1: But I think just on our own inflation, the fact

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Speaker 1: that we haven't yet cut and many other people of

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Speaker 1: cut rates, we'll see them go to twenty five and

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Speaker 1: have a what we might describe as a cautious twenty

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Speaker 1: five rate point basis point rate cut, sort of singing

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Speaker 1: that we're not about to do a whole lot all

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Speaker 1: in a row, but just here's twenty five. We'll see

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Speaker 1: how we go, just a little bit of an insurance

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Speaker 1: against a weaker economy later this year. Is it hard

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Speaker 1: for the Reserve Bank not to cut rates given all

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Speaker 1: the talk and the fact that they haven't said anything

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Speaker 1: for a while.

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Speaker 2: Yeah. Look, my understanding and observations of the RBA over

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Speaker 2: gosh thirty something years in doing similar jobs to this

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Speaker 2: one is that when it's predominantly priced into the market,

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Speaker 2: and at the moment we've got a ninety odd percent

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Speaker 2: chance for ray Cup being announced tomorrow, they don't disappoint

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Speaker 2: with whatever's price in. So if there's no rate cut,

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Speaker 2: price in the change, if it's eighty ninety percent price in,

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Speaker 2: they'll tend to do that. Now, there's one or two

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Speaker 2: exceptions that they have shocked the market, but they're very,

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Speaker 2: very rare, and I think right at the moment, with

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Speaker 2: the way that the inflation numbers that we've been speaking

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Speaker 2: about in recent weeks and just what's happening in the economy,

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Speaker 2: it's okay but probably just needs a little bit of

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Speaker 2: cash flow support. If we can call a rate cut

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Speaker 2: that sort of driver of the economy that it's just

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Speaker 2: going to be one of these promises and things. It's

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Speaker 2: going to be hard to sort of go against that.

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Speaker 2: Michelle Bullock on her board will be really struggling to say, look,

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Speaker 2: we can't cut yet when the numbers are sort of

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Speaker 2: saying they should.

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Speaker 1: The other thing we get after the board meeting is

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Speaker 1: the Reserve Bank statement on Monastery policy, which is kind

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Speaker 1: of like the bible of what the Reserve Bank thinks

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Speaker 1: is going on in the economy for the next six

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Speaker 1: months or they do it every well, send me annual.

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Speaker 2: Yeah, they do, and this is the one too that

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Speaker 2: The other thing that makes this so exciting for me

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Speaker 2: is that they're going to be uptaking their forecasts from

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Speaker 2: the last statement, and look, it'll be there's a couple

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Speaker 2: of things I think we can be moderately confident about

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Speaker 2: their forecast for GINDP will probably not change mush. They

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Speaker 2: had a bottoming out and then a gentle recovery through

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Speaker 2: twenty twenty five. Yep, that still seems to be completely valid.

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Speaker 2: They may will revise down asmich their unemployment forecasts still

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Speaker 2: probably edging up over the course of this year, but

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Speaker 2: maybe not as much as they were thinking. But this

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Speaker 2: is where the crunch comes. They will, famous last words,

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Speaker 2: be revising down their forecasts for inflation, and that's why

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Speaker 2: they're going to be cutting interestrates. That a number of

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Speaker 2: other wonderful market economists who look at the CPI in

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Speaker 2: fine detail, Westpac and CBA, for example, they have both

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Speaker 2: come out in the last week or so and significantly

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Speaker 2: revised their forecast for inflation. So for the RBA not

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Speaker 2: to be of the same ilk here, maybe not the

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Speaker 2: same decimal point on the inflation forecast, but to revise

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Speaker 2: down the inflation outlook is something that they just have

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Speaker 2: to do.

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Speaker 1: We also get data on the employment market, a couple

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Speaker 1: of very important points of data this week.

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Speaker 2: Yeah, we do talk about bad timing. The day after

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Speaker 2: the board meeting, we get the wage price in next numbers,

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Speaker 2: and you know, wages being one of these really important

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Speaker 2: drivers in services inflation, and something that the RBA maybe

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Speaker 2: a year ago was a little concerned about, the gold

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Speaker 2: wage price spiral that they used to go on about.

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Speaker 2: That is thankfully proven not to be the case, because

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Speaker 2: we've already had wages peaking at four point three percent

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Speaker 2: about a year ago. The numbers that come out on

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Speaker 2: Wednesday will probably confirm annual wages growth down to the

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Speaker 2: low threes. I think we can call it three point

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Speaker 2: two three point three percent, So can I use the goldilocks,

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Speaker 2: you know, not too hot, not too cold, but just right.

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Speaker 2: That sort of low three percent wages growth is sort

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Speaker 2: of the thing that makes everybody happy. And then on

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Speaker 2: Thursday we get the monthly labor force numbers, and boy, boy,

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Speaker 2: have they been resilient. We've had that month. I think

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Speaker 2: for gosh, six ten months, we've had an upside surprise

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Speaker 2: to the employment result. And as we sit here now,

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Speaker 2: we've got an unemployment rate of four point zero percent.

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Speaker 2: It would be no surprise if we just able to

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Speaker 2: do for a statistical down blip. So it'll be interesting

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Speaker 2: to see whether we've just got a little bit of

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Speaker 2: that labor market catching up to the weaker economy that

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Speaker 2: we had last year, and so all eyes after the

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Speaker 2: RBA decision, where is the labor market? Wages, employment, and

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Speaker 2: unemployment rate.

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Speaker 1: It may not feel like it for many people, but

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Speaker 1: an unemployment rate of four or their abounts, wage rises

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Speaker 1: of kind of just over three, inflation of just over three,

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Speaker 1: just under three, and a rate cut, that ain't a

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Speaker 1: bad economy.

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Speaker 2: Look, I got into trouble for saying this on X recently.

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Speaker 2: Then in a way, if you take a complete nutter

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Speaker 2: step back from from all of the debate about rates

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Speaker 2: and politics and elections and all this other stuff, if

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Speaker 2: you were to say to most policy makers, be they

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Speaker 2: government related people, treasury officials, RBA officials, and said, look,

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Speaker 2: in the next few years, if we were to have

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Speaker 2: an unemployment rate hovering around four percent, an inflation rate

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Speaker 2: tracking towards two and a half having been a problem

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Speaker 2: privacy but sort of hanging around between two and a

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Speaker 2: quarter and two and three quarters, with the budget in

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Speaker 2: reasonably sound shape, you know, maybe a small deficit this year,

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Speaker 2: wages growth a little above three, you'd say, that's pretty

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Speaker 2: bloody good. It doesn't happen very often. You get that, well,

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Speaker 2: that quadrilla of results, and here we are We've got.

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Speaker 1: Them well, Stephen, enjoy the next few days. You'll be exhausted.

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Speaker 1: Next week.

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Speaker 2: Oh, I'm going to be loving it. I'm going to

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Speaker 2: be loving it so so much to look at, and

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Speaker 2: by this time next week we'll have a much better

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Speaker 2: idea on what the RBA is thinking and the labor

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Speaker 2: market trends.

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Speaker 1: Enjoy that, Stephen, Enjoy the week.

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Speaker 2: We'll do.

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Speaker 1: That was econo of Stephen could Corlus, better known as

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Speaker 1: the Kok. You can find him at the kirk dot

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Speaker 1: com and follow him on X using the handle of

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Speaker 1: the kirk. I'm sure, I almer and this is clear

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Speaker 1: and reed. The week ahead