1 00:00:05,640 --> 00:00:08,320 Speaker 1: Welcome to the Fear and Greed Business Interview. I'm sure, Alma, 2 00:00:08,600 --> 00:00:11,440 Speaker 1: regular listeners to the podcast would have heard me speak 3 00:00:11,440 --> 00:00:15,000 Speaker 1: a fortnight ago to doctor Shane Oliver, chief economist and 4 00:00:15,080 --> 00:00:18,919 Speaker 1: head of investment Strategy at AMP. That conversation took place 5 00:00:18,960 --> 00:00:21,560 Speaker 1: ahead of the inauguration of Donald Trump, and we were 6 00:00:21,560 --> 00:00:24,320 Speaker 1: looking at the potential impact of the policies he had flagged, 7 00:00:24,320 --> 00:00:27,920 Speaker 1: without knowing if any of them would actually be introduced. Well, 8 00:00:28,440 --> 00:00:30,680 Speaker 1: now it's a very different story. A trade war has 9 00:00:30,720 --> 00:00:33,960 Speaker 1: begun after the President issued an executive order for a 10 00:00:34,040 --> 00:00:37,600 Speaker 1: twenty five percent tariff on Mexico and Canada, with the 11 00:00:37,640 --> 00:00:40,519 Speaker 1: exception of Canadian oil and energy products, it'll be just 12 00:00:40,560 --> 00:00:44,200 Speaker 1: be ten percent. Canada retaliated almost immediately with its own 13 00:00:44,240 --> 00:00:47,960 Speaker 1: tariffs on US goods. China faces another ten percent tariff 14 00:00:48,000 --> 00:00:50,680 Speaker 1: on top of existing tariffs. I wanted to follow up 15 00:00:50,720 --> 00:00:52,600 Speaker 1: today with Shane for a look at the global impact 16 00:00:52,600 --> 00:00:54,720 Speaker 1: of this trade war, what it means for inflation, what 17 00:00:54,720 --> 00:00:56,960 Speaker 1: it might mean for interest rates locally, the impact is 18 00:00:57,000 --> 00:00:59,480 Speaker 1: going to have on us. Shane Oliver, Welcome back to 19 00:00:59,480 --> 00:01:00,000 Speaker 1: Fear and Greed. 20 00:01:00,600 --> 00:01:01,840 Speaker 2: Thanks Sean, Thanks for having me. 21 00:01:02,120 --> 00:01:04,040 Speaker 1: Shane, You've been an economist for a long time, a 22 00:01:04,120 --> 00:01:07,120 Speaker 1: chief economist at AMP for many years. With something like 23 00:01:07,160 --> 00:01:09,520 Speaker 1: this happens where Donald Trump comes and wax on twenty 24 00:01:09,520 --> 00:01:11,919 Speaker 1: five percent tarifts, is that kind of exciting. It's certainly 25 00:01:11,920 --> 00:01:14,560 Speaker 1: not run of the mill. It's certainly not run of 26 00:01:14,600 --> 00:01:17,399 Speaker 1: the mill. I guess it does create a lot of activity, 27 00:01:17,400 --> 00:01:18,840 Speaker 1: and in that sense it crat It's a bit of 28 00:01:18,840 --> 00:01:21,959 Speaker 1: excitement is to you start wondering about where it's going 29 00:01:22,040 --> 00:01:25,039 Speaker 1: to go. The only problem is when I started my career, 30 00:01:25,120 --> 00:01:26,280 Speaker 1: there was a lot of changes. 31 00:01:26,319 --> 00:01:30,560 Speaker 2: Back then. Tariffs were being slashed, we were seeing deregulation 32 00:01:30,720 --> 00:01:34,040 Speaker 2: across the board, The Aussie dollar was floated, interest rates 33 00:01:34,040 --> 00:01:38,360 Speaker 2: were freed up. There was product market deregulation, labor market deregulation, 34 00:01:38,560 --> 00:01:41,680 Speaker 2: tax reform. All of that had the same level of excitement. 35 00:01:41,720 --> 00:01:45,479 Speaker 2: But I thought it was all positive moves, whereas now 36 00:01:46,080 --> 00:01:48,080 Speaker 2: I worry that it's an unwinding of a lot of 37 00:01:48,080 --> 00:01:51,080 Speaker 2: the positive stuff we saw decades ago, back in the 38 00:01:51,120 --> 00:01:53,720 Speaker 2: eighties and nineties, And so that sort of at the 39 00:01:53,720 --> 00:01:55,680 Speaker 2: back of my mind makes me feel a bit negative 40 00:01:55,720 --> 00:02:00,720 Speaker 2: about it, because I know where this can ultimately end up. Necessarily, 41 00:02:00,720 --> 00:02:03,880 Speaker 2: a good place could be a bad place. So that's 42 00:02:03,880 --> 00:02:07,200 Speaker 2: why I'd rather not be going through this. But yes, 43 00:02:07,520 --> 00:02:10,400 Speaker 2: waiting to see what happens, I can create a degree 44 00:02:10,400 --> 00:02:13,360 Speaker 2: of excitement, but to be honest with I'd rather see 45 00:02:13,360 --> 00:02:15,000 Speaker 2: something in a more positive direction. 46 00:02:15,880 --> 00:02:18,000 Speaker 1: Okay, so what do the tar and we can only 47 00:02:18,000 --> 00:02:22,480 Speaker 1: take Donald Trump at face failure there apparently coming in 48 00:02:22,600 --> 00:02:27,000 Speaker 1: almost immediately the tariffs. Assuming that does occur, and I'm 49 00:02:27,000 --> 00:02:30,079 Speaker 1: not quite sure the transmission mechanism, it's going to take 50 00:02:30,080 --> 00:02:32,800 Speaker 1: some time for prices to change, but let's say it 51 00:02:32,800 --> 00:02:35,880 Speaker 1: happens fairly quickly. What does that mean. Let's start with 52 00:02:35,960 --> 00:02:37,000 Speaker 1: the US consumer. 53 00:02:37,560 --> 00:02:40,959 Speaker 2: Well, Donald Trump has regularly argued that he doesn't see 54 00:02:41,000 --> 00:02:44,639 Speaker 2: any increase in prices, that it's the foreigner who pays 55 00:02:44,720 --> 00:02:48,320 Speaker 2: the tariff, not the American consumer. But we know from 56 00:02:48,320 --> 00:02:52,040 Speaker 2: basic economics that you put a tariff on to change 57 00:02:52,080 --> 00:02:57,160 Speaker 2: relative prices. So the imported the product the docks in 58 00:02:57,200 --> 00:03:00,239 Speaker 2: the US or across the Canadian Mexican border might have 59 00:03:00,280 --> 00:03:04,079 Speaker 2: been one hundred dollars worth of imports. The importer has 60 00:03:04,120 --> 00:03:06,160 Speaker 2: to pay an extra twenty five dollars on that to 61 00:03:06,160 --> 00:03:09,440 Speaker 2: the US government. If the retail price of that product 62 00:03:09,520 --> 00:03:12,320 Speaker 2: was say one hundred and fifty dollars. That twenty five 63 00:03:12,560 --> 00:03:15,200 Speaker 2: dollars tax could be added on to that if the 64 00:03:15,240 --> 00:03:19,400 Speaker 2: importer passes it through completely. Obviously, there's some debate that 65 00:03:19,600 --> 00:03:22,600 Speaker 2: they may absorb some of that into their margins, the 66 00:03:22,720 --> 00:03:26,640 Speaker 2: foreign producer may absorb some into their margins, and so 67 00:03:26,720 --> 00:03:29,680 Speaker 2: the pass through may not be a complete twenty five dollars, 68 00:03:29,760 --> 00:03:31,760 Speaker 2: but odds are a big chunk of it will get 69 00:03:31,800 --> 00:03:34,440 Speaker 2: passed through. And that's the whole point of the tariff. 70 00:03:34,480 --> 00:03:37,880 Speaker 2: It's designed to put up prices of imports, make them 71 00:03:37,960 --> 00:03:42,080 Speaker 2: less competitive compared to home made products in the US, 72 00:03:42,560 --> 00:03:44,800 Speaker 2: and so the US consumer will pay for this one 73 00:03:44,800 --> 00:03:47,680 Speaker 2: way or another. Either the imports go up in price 74 00:03:47,800 --> 00:03:49,840 Speaker 2: and they have to bear that cost and pay more, 75 00:03:50,080 --> 00:03:53,560 Speaker 2: or alternatively, they have to switch to higher cost domestic 76 00:03:53,760 --> 00:03:57,240 Speaker 2: production wherever that exists, if it's possible, and they still 77 00:03:57,320 --> 00:04:00,120 Speaker 2: end up paying more. I know Donald Trump says no, 78 00:04:00,200 --> 00:04:02,960 Speaker 2: it doesn't work that way, But if that's the case, 79 00:04:03,000 --> 00:04:05,920 Speaker 2: then there's a gross inconsistency what he's saying, And to 80 00:04:05,920 --> 00:04:07,560 Speaker 2: be honest with her, I think it's about as much 81 00:04:07,560 --> 00:04:11,120 Speaker 2: gobbledy goop as blaming the DEI for the plane crash 82 00:04:11,120 --> 00:04:15,640 Speaker 2: in Washington or the LA fires we know from history, 83 00:04:15,960 --> 00:04:19,120 Speaker 2: as you put up tariffs, consumers end up paying more. 84 00:04:19,880 --> 00:04:23,440 Speaker 1: What about the response from Canada and Mexico is indicated 85 00:04:23,480 --> 00:04:27,640 Speaker 1: it's looking at putting up tariffs this sort of trade war. 86 00:04:27,839 --> 00:04:31,040 Speaker 1: Is it the case where once one does, it's tip 87 00:04:31,120 --> 00:04:32,840 Speaker 1: for tat? I suppose as what I'm trying to say here, 88 00:04:33,440 --> 00:04:35,760 Speaker 1: and can anyone win in that? Doesn't it just lift 89 00:04:35,800 --> 00:04:37,480 Speaker 1: the price rises across the board? 90 00:04:37,880 --> 00:04:40,400 Speaker 2: No, it just keeps going until one side or another 91 00:04:40,440 --> 00:04:43,919 Speaker 2: gives up, or you know, the tariffs at such a 92 00:04:44,000 --> 00:04:46,479 Speaker 2: level that there's no more imports. Anyway, we saw a 93 00:04:46,520 --> 00:04:49,240 Speaker 2: bit of this in the trade war in twenty eighteen 94 00:04:49,480 --> 00:04:52,920 Speaker 2: when the UA started putting tariffs on China. There was 95 00:04:52,920 --> 00:04:54,880 Speaker 2: a tit for tat move there. I think in the end, 96 00:04:55,839 --> 00:04:58,240 Speaker 2: more and more goods on each side we're being subject 97 00:04:58,240 --> 00:05:00,640 Speaker 2: to the tariffs. In the end, of course ran out 98 00:05:00,640 --> 00:05:03,960 Speaker 2: of imports to put more tariffs on. And then of 99 00:05:04,000 --> 00:05:06,400 Speaker 2: course it coincided with a fall in the US share 100 00:05:06,440 --> 00:05:09,240 Speaker 2: market into Christmas Eve twenty eighteen and we had almost 101 00:05:09,279 --> 00:05:13,080 Speaker 2: twenty percent fall and Donald Trump got nervous and pivoted 102 00:05:13,120 --> 00:05:17,159 Speaker 2: towards the Phase one trade deal. So ultimately something gives, 103 00:05:17,720 --> 00:05:20,239 Speaker 2: but you can go a long way before that actually 104 00:05:20,320 --> 00:05:23,560 Speaker 2: happens this time around, though it's a lot more aggressive upfront. 105 00:05:24,320 --> 00:05:28,080 Speaker 2: The tariff increases back in twenty eighten increase the average 106 00:05:28,120 --> 00:05:30,839 Speaker 2: tariff right in the US by one to two percentage points. 107 00:05:31,520 --> 00:05:36,000 Speaker 2: This time around, it's at least six percentage points, potentially 108 00:05:36,080 --> 00:05:39,119 Speaker 2: more because the country is involved, are forty five percent 109 00:05:39,160 --> 00:05:42,320 Speaker 2: of imports coming into the US, and the amounts being 110 00:05:42,360 --> 00:05:45,400 Speaker 2: talked about a much greater twenty five, ten percent and 111 00:05:45,440 --> 00:05:48,279 Speaker 2: so on, much bigger amounts than back then. So you 112 00:05:48,320 --> 00:05:51,120 Speaker 2: could see a more immediate impact this time around, assuming 113 00:05:51,360 --> 00:05:54,880 Speaker 2: the tariffs go through as Donald Trump is indicating. 114 00:05:55,200 --> 00:05:56,920 Speaker 1: Stay with me, Shane, we'll be back in a minute 115 00:05:56,960 --> 00:06:05,960 Speaker 1: to talk about what it all means for Australia. I'm 116 00:06:05,960 --> 00:06:10,880 Speaker 1: speaking with doctor Shane Oliver from AMP before. I mean, 117 00:06:10,920 --> 00:06:13,359 Speaker 1: we'll get to the dollar and equities in that in 118 00:06:13,400 --> 00:06:18,080 Speaker 1: a moment Before that, the economic impact on Australia. Isn't 119 00:06:18,279 --> 00:06:20,799 Speaker 1: there a substitution effect here that maybe some of Canadians 120 00:06:20,839 --> 00:06:22,440 Speaker 1: and Mexicans think, well, we're not going to sell to 121 00:06:22,440 --> 00:06:24,480 Speaker 1: the US, will look for other markets. We're a long 122 00:06:24,480 --> 00:06:26,120 Speaker 1: way away, so we're probably not going to buy Mexican 123 00:06:26,160 --> 00:06:29,400 Speaker 1: cars I get that, but that just could that happen? 124 00:06:29,960 --> 00:06:32,120 Speaker 2: It certainly could. You know, there could be good things 125 00:06:32,160 --> 00:06:34,240 Speaker 2: in this. We could get products from other countries that 126 00:06:34,279 --> 00:06:36,839 Speaker 2: we currently don't get. It takes a while, though, for 127 00:06:36,920 --> 00:06:39,360 Speaker 2: that to start happening, because a lot of the infrastructure 128 00:06:39,400 --> 00:06:43,359 Speaker 2: in Mexico and Canada is pointed north or in the 129 00:06:43,360 --> 00:06:46,200 Speaker 2: case of Canada, south and they'd have to change that 130 00:06:46,360 --> 00:06:48,920 Speaker 2: have to come via ships. So it take a while 131 00:06:48,960 --> 00:06:51,200 Speaker 2: for all of that to work out. But the basic 132 00:06:51,279 --> 00:06:54,080 Speaker 2: impact would be I mean, there's several things going on here, 133 00:06:54,120 --> 00:06:56,800 Speaker 2: you know why of share markets certainly got nervous on 134 00:06:56,839 --> 00:06:59,400 Speaker 2: the back of this. I think many had thought, many 135 00:06:59,520 --> 00:07:03,560 Speaker 2: vests had thought, well, you know, it's just bargaining. You know, 136 00:07:03,600 --> 00:07:06,480 Speaker 2: there'll be a deal a deal now. Of course, what's 137 00:07:06,480 --> 00:07:09,039 Speaker 2: happened is that markets worry that, well, it won't just 138 00:07:09,080 --> 00:07:11,960 Speaker 2: be these tariffs. There'll be other ones imposed down the track. 139 00:07:12,520 --> 00:07:15,480 Speaker 2: So if everyone starts imposing tariffs and there's tit for 140 00:07:15,520 --> 00:07:18,240 Speaker 2: tat all around the world, then it leads to a 141 00:07:18,280 --> 00:07:21,640 Speaker 2: reduction in global trade. And that's where Australia ends up 142 00:07:21,680 --> 00:07:25,120 Speaker 2: losing outs because we are a trading nation, we're relatively open. 143 00:07:25,400 --> 00:07:28,280 Speaker 2: If there's less free trade globally, that can mean less 144 00:07:28,280 --> 00:07:31,440 Speaker 2: demand for our exports, of course, even if we don't 145 00:07:31,440 --> 00:07:34,520 Speaker 2: have the tariffs put on US lester Man coming out 146 00:07:34,560 --> 00:07:37,600 Speaker 2: of China for example, and that of course would be 147 00:07:37,680 --> 00:07:40,360 Speaker 2: a negative for Australia. And that's partly why my share 148 00:07:40,360 --> 00:07:42,000 Speaker 2: markets have gotten very nervous about it. 149 00:07:42,440 --> 00:07:44,520 Speaker 1: So what do you think share markets will do over 150 00:07:44,560 --> 00:07:47,680 Speaker 1: the next little bit. We've had a dip immediately, not surprising, 151 00:07:47,760 --> 00:07:50,000 Speaker 1: but kind of these things take weeks and weeks and 152 00:07:50,080 --> 00:07:52,760 Speaker 1: maybe months to work out. Shane, where do you think 153 00:07:52,800 --> 00:07:53,400 Speaker 1: they end up? 154 00:07:54,320 --> 00:07:56,040 Speaker 2: Well, Unfortunately, it's going to be a rough ride for 155 00:07:56,040 --> 00:07:57,720 Speaker 2: a little while. If you go back to twenty eighteen, 156 00:07:57,920 --> 00:08:01,440 Speaker 2: it's a similar playbook. Share market was very strong going 157 00:08:01,480 --> 00:08:05,600 Speaker 2: into twenty eighteen, just as it has been recently. Donald 158 00:08:05,640 --> 00:08:10,640 Speaker 2: Trump that time around waited to strengthen the US economy 159 00:08:11,160 --> 00:08:13,720 Speaker 2: via his tax cuts and deregulation in twenty seventeen. This 160 00:08:13,760 --> 00:08:15,680 Speaker 2: time he obviously doesn't feel the need to do that. 161 00:08:15,960 --> 00:08:18,720 Speaker 2: Maybe he thinks it's already pretty strong, unemployment's already pretty low, 162 00:08:18,760 --> 00:08:22,200 Speaker 2: so that's why he's moving so quickly earlier on and 163 00:08:23,920 --> 00:08:26,280 Speaker 2: I think this could have long a lot further to go. 164 00:08:26,680 --> 00:08:28,640 Speaker 2: I mean, it is quite possible we get up one 165 00:08:28,680 --> 00:08:31,280 Speaker 2: morning and we find that the tariffs have been removed 166 00:08:31,320 --> 00:08:34,000 Speaker 2: because Mexico and Canada and maybe China have done what 167 00:08:34,920 --> 00:08:37,240 Speaker 2: the US watts. But then by the same token, Mexico 168 00:08:37,280 --> 00:08:40,000 Speaker 2: has already done a lot on the border. What more 169 00:08:40,000 --> 00:08:42,360 Speaker 2: does the US wants? So a lot of uncertainty around that, 170 00:08:42,920 --> 00:08:46,199 Speaker 2: but markets will sort of be fretting that this will 171 00:08:46,240 --> 00:08:52,960 Speaker 2: spread to semiconductors, steel, aluminium, other metals, pharmaceutical products and 172 00:08:53,000 --> 00:08:55,840 Speaker 2: so on. Tariff will be put on the EU. Maybe 173 00:08:55,880 --> 00:08:58,240 Speaker 2: he'll do the general tariff on all the imports that 174 00:08:58,280 --> 00:09:02,000 Speaker 2: he was talking about. That maybe one of the arguments 175 00:09:02,000 --> 00:09:04,560 Speaker 2: he puts up for the tariff that the endpoint is 176 00:09:05,559 --> 00:09:07,960 Speaker 2: the tariff itself. It's as a bargaining chip, which he 177 00:09:08,040 --> 00:09:10,840 Speaker 2: sometimes refers to. It is actually to bring production back 178 00:09:10,880 --> 00:09:13,720 Speaker 2: to the US and raise more revenue. If that's the case, 179 00:09:13,760 --> 00:09:15,920 Speaker 2: these tariffs could be in place for a lot longer. 180 00:09:16,160 --> 00:09:19,319 Speaker 2: That means less trade globally, hit to global economic activity. 181 00:09:20,160 --> 00:09:21,680 Speaker 2: I don't know how much, but it could be up 182 00:09:21,720 --> 00:09:24,840 Speaker 2: to one percentage point off global economic activity and a 183 00:09:24,880 --> 00:09:28,760 Speaker 2: potential boost to inflation globally. So it could take a 184 00:09:28,760 --> 00:09:32,000 Speaker 2: while to play out now in twenty eighteen, you tend 185 00:09:32,080 --> 00:09:34,040 Speaker 2: to see these knee jerk reactions each time as a 186 00:09:34,080 --> 00:09:37,520 Speaker 2: tariff announcement. Then the market sort of settles down, then 187 00:09:37,559 --> 00:09:40,880 Speaker 2: there's another announcement, market settles down, and so on. But 188 00:09:40,920 --> 00:09:43,400 Speaker 2: by the time we got to September October twenty eighten, 189 00:09:43,480 --> 00:09:45,840 Speaker 2: it became too much, particularly when it was combined with 190 00:09:45,920 --> 00:09:49,000 Speaker 2: the Fed raising interest rates at the time, and US 191 00:09:49,000 --> 00:09:51,439 Speaker 2: shares had a near twenty percent pull from the high 192 00:09:51,440 --> 00:09:54,240 Speaker 2: in September twenty eighten to the lower end Christmas Eve 193 00:09:55,040 --> 00:09:57,760 Speaker 2: twenty eighteen. Donald Trump then got nervous, and I think 194 00:09:57,840 --> 00:09:59,880 Speaker 2: one of his KPIs is he wants shares to go 195 00:10:00,120 --> 00:10:03,480 Speaker 2: up more than down. He then pivoted, so maybe you'll 196 00:10:03,520 --> 00:10:06,120 Speaker 2: see the same play out again. Rough ride at some 197 00:10:06,360 --> 00:10:09,320 Speaker 2: for some time. Then of course you start to see 198 00:10:09,360 --> 00:10:13,079 Speaker 2: some pivoting. Donald Trump starts to wind back a little bit, 199 00:10:13,720 --> 00:10:16,560 Speaker 2: and then markets could go there on their merry way again. 200 00:10:16,640 --> 00:10:18,480 Speaker 2: But I suspect ran for a little bit of a 201 00:10:18,559 --> 00:10:19,439 Speaker 2: volatile ride. 202 00:10:19,280 --> 00:10:22,080 Speaker 1: Here bringing it back home and interest rates, which we 203 00:10:22,160 --> 00:10:24,880 Speaker 1: always do on this show. What does the reserve vank 204 00:10:24,920 --> 00:10:27,600 Speaker 1: do it it next month? Because there's plenty of reasons 205 00:10:27,600 --> 00:10:30,760 Speaker 1: for them to cut rates when it meets. But this 206 00:10:30,880 --> 00:10:35,320 Speaker 1: sort of uncertainty doesn't help that case necessarily. No, it doesn't. 207 00:10:35,320 --> 00:10:40,240 Speaker 2: But interestingly, as we're speaking, you know, the probability of 208 00:10:40,320 --> 00:10:43,000 Speaker 2: a rate cup in February a couple of weeks time 209 00:10:43,000 --> 00:10:45,920 Speaker 2: has actually gone up. On Friday it was ninety two 210 00:10:45,920 --> 00:10:48,040 Speaker 2: to ninety three percent. When our last look today it 211 00:10:48,120 --> 00:10:51,280 Speaker 2: was ninety one was ninety eight percent of the look 212 00:10:51,280 --> 00:10:53,439 Speaker 2: of the futures, and the say called, oh, I yes, 213 00:10:53,600 --> 00:10:55,719 Speaker 2: you know about ninety six. So it's actually gone up. 214 00:10:56,000 --> 00:10:59,120 Speaker 2: And I think that shows the ambiguity here in terms 215 00:10:59,120 --> 00:11:01,880 Speaker 2: of inflationient. We know that if you have these tariffs 216 00:11:01,880 --> 00:11:04,560 Speaker 2: it will be a hit to economic activity. Australia is 217 00:11:04,600 --> 00:11:06,720 Speaker 2: vulnerable because it could have been less a man coming 218 00:11:06,720 --> 00:11:09,080 Speaker 2: out of China, so that's a hit to demand in 219 00:11:09,120 --> 00:11:13,240 Speaker 2: the economy and GDP on inflation. It's ambiguous, and Deputy 220 00:11:13,280 --> 00:11:17,120 Speaker 2: Governor Hauser did make this point last December. On the 221 00:11:17,160 --> 00:11:20,400 Speaker 2: one hand, yeah, less trade globally could mean higher prices. 222 00:11:20,840 --> 00:11:23,640 Speaker 2: On the other hand, less economic activity can put downwards 223 00:11:23,679 --> 00:11:26,480 Speaker 2: pressure on inflation. That's why it's sort of ambiguous, and 224 00:11:26,520 --> 00:11:28,840 Speaker 2: I think the money markets leaning to the view it 225 00:11:28,920 --> 00:11:31,920 Speaker 2: means downwards pressure on inflation. So my view would be 226 00:11:32,120 --> 00:11:36,800 Speaker 2: that unless we see Australia introducing retail editory tariffs in 227 00:11:36,840 --> 00:11:40,080 Speaker 2: response to US tariffs on our products, or we see 228 00:11:40,080 --> 00:11:42,880 Speaker 2: our precipitous crash and the Aussie dollar down a fifty 229 00:11:42,880 --> 00:11:45,920 Speaker 2: cents or something like that, then I think the RBA 230 00:11:46,000 --> 00:11:49,440 Speaker 2: would most likely proceed with a cut. But by the 231 00:11:49,480 --> 00:11:52,920 Speaker 2: same token, I don't think we should assume that we're 232 00:11:52,920 --> 00:11:55,240 Speaker 2: going to see it cuts at every single meeting. I 233 00:11:55,240 --> 00:11:58,040 Speaker 2: think the more likely scenarios you get a cut in February, 234 00:11:58,400 --> 00:12:00,920 Speaker 2: then the RBA has a poor The next meeting in 235 00:12:00,960 --> 00:12:03,239 Speaker 2: April is probably in the middle of the election campaign. 236 00:12:03,640 --> 00:12:06,000 Speaker 2: The RBA would probably want to see watch the impact 237 00:12:06,040 --> 00:12:08,880 Speaker 2: of the lower Aussie dollar. Is the labor market still 238 00:12:08,880 --> 00:12:11,840 Speaker 2: remaining strong, and then they potentially go again in May. 239 00:12:12,200 --> 00:12:14,680 Speaker 2: So what the lower Aussie dollar does, I think is 240 00:12:14,720 --> 00:12:17,800 Speaker 2: it just slows down the pace of easing in Australia. 241 00:12:18,440 --> 00:12:20,079 Speaker 2: I don't think it necessarily stops the. 242 00:12:20,120 --> 00:12:22,559 Speaker 1: Using Shane, thanks for talking to Fear and Greed. 243 00:12:22,880 --> 00:12:23,400 Speaker 2: Thanks Sean. 244 00:12:23,679 --> 00:12:25,760 Speaker 1: That was doctor Shane Older, chief economist and head of 245 00:12:25,840 --> 00:12:28,840 Speaker 1: Investment Strategy at AMP. This is the fear and Greed 246 00:12:28,840 --> 00:12:31,400 Speaker 1: business interview. Remember this is general information only, and you 247 00:12:31,400 --> 00:12:34,840 Speaker 1: should see professional advice before making investment decisions. Join us 248 00:12:34,840 --> 00:12:36,960 Speaker 1: every morning for the full episode of Fear and Greed. 249 00:12:37,040 --> 00:12:39,360 Speaker 1: Daily business news for people who make their own decisions. 250 00:12:39,600 --> 00:12:41,520 Speaker 1: I'm Shane Elmer. Enjoy your day.