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Speaker 1: You're listening to a podcast from News Talks'd be follow

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Speaker 1: this and our wide range of podcasts now on iHeartRadio.

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Speaker 2: The Reserve Bank has cut the official cash rate by

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Speaker 2: twenty five basis points to a three year low of

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Speaker 2: three percent. To discuss this further, we're joined by Brad Olsen.

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Speaker 2: He's a friend of the show, and he's also the

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Speaker 2: CEO of Infometrics. Brad, get a tou.

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Speaker 3: Good afternoon, Brad.

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Speaker 4: Did they go hard enough? Wouldn't have you know? Fifty

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Speaker 4: points would have put some much needed juice into the economy,

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Speaker 4: wouldn't it have?

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Speaker 3: It would have to be fair. They actually did consider

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Speaker 3: going by fifty. They took a vote by four to two.

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Speaker 3: They decided to cut by twenty five rather than fifty.

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Speaker 3: Let's be clear, though, that was very well anticipated. We

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Speaker 3: all thought we were getting the twenty five, so tick

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Speaker 3: on that box. But by making that expectation that you

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Speaker 3: could see or that there were votes on the committee

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Speaker 3: to go even harder, that does send a strong enough

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Speaker 3: signal that hey, they've probably got a bit further to go.

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Speaker 3: Most expectations now seem to be shifting. People were thinking

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Speaker 3: maybe two point seventy five was now the bottom. We

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Speaker 3: had metrics this afternoon. We've changed our pick to now

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Speaker 3: expecting a further cut in both October and November, taking

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Speaker 3: their official cash rate down to two point five percent.

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Speaker 3: So we've done a lot of the heavy lifting, but

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Speaker 3: there still might be a little bit more relief on

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Speaker 3: the way.

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Speaker 2: You mentioned that vote four to two. Do we get

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Speaker 2: to know which way and who votes for which option brand?

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Speaker 2: That would be nice to know information or is it

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Speaker 2: all anonymous?

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Speaker 3: It is all anonymous as much as I would also

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Speaker 3: like the gossip to sort of understand it because as

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Speaker 3: well one member of the committee, they didn't vote this way,

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Speaker 3: but they did am and r about it. Of actually

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Speaker 3: doing nothing this time, it's sort of, you know, holding

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Speaker 3: things steady. So there's clearly a bit of diversity of

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Speaker 3: view out there. What's interesting is it's not just our

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Speaker 3: central bank doing this either. You look at a number

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Speaker 3: of central banks around the world, the Australian one in

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Speaker 3: the last couple of months at one point they had

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Speaker 3: a divided vote. I think the UK also had a

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Speaker 3: divided vote recently. So there's a lot of uncertainty out

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Speaker 3: there over how much more do you need to do?

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Speaker 3: And I think the big one for decision makers at

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Speaker 3: the moment is the timing delays because by the time

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Speaker 3: this official cash rate cut that we got today actually

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Speaker 3: hits the numbers in about a year's time. Because it

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Speaker 3: takes that long for everyone to refix. You could see

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Speaker 3: a lot of the interest rate cuts that have already

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Speaker 3: happened be hitting people's back pockets. They'll have lower mortgages

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Speaker 3: and they might be spending more. So there is a

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Speaker 3: lot of sort of timing questions going on, and I

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Speaker 3: think unfortunately a little bit of patience for those lower

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Speaker 3: interest rates to actually be affecting people's back pockets and

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Speaker 3: what they spend on. So it's all about timing, and

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Speaker 3: so far it's difficult to pin that down.

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Speaker 4: But patience is the problem because we need an economic

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Speaker 4: turnaround right now. You know, we need things to happen today.

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Speaker 4: And look, you know that twenty five basis points, as

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Speaker 4: you said, was well, we knew that well in advance,

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Speaker 4: so you know everyone's already the banks have already factored

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Speaker 4: that in. So does it actually give any juice into

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Speaker 4: the economy just twenty five basis points?

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Speaker 3: Oh yes, and no. The thing is is that economic

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Speaker 3: conditions today, economic conditions next month. They were sort of set.

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Speaker 3: The conditions for that were set a year ago. Like

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Speaker 3: even if the Reserve Bank cut one hundred basis points today,

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Speaker 3: you wouldn't see that filter through immediately because every you know,

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Speaker 3: you've got a large number of households out there that

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Speaker 3: are either hevery fixed in the last couple of months

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Speaker 3: or might still be refixing in the next couple But

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Speaker 3: it doesn't sort of hit as immediately as everyone sort

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Speaker 3: of wants or expects, So there is always this sort

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Speaker 3: of persistent timing piece. What I think we're seeing a

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Speaker 3: bit more of is that the second quarter of the

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Speaker 3: year April through June that was a bit more lackluster.

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Speaker 3: You saw the tariffs sort of make everyone freeze in place.

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Speaker 3: No one was confident, everyone was uncertain. But some of

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Speaker 3: the partial data for July shows a little bit more.

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Speaker 3: You've seen manufacturing that's ticked up, spending that's ticked up,

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Speaker 3: So we're hoping to see a little bit more of

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Speaker 3: that momentum coming through. It is a slow recovery, but

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Speaker 3: it is a recovery nonetheless. But you're right, everyone wants

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Speaker 3: a whole lot more. I'm not sure we can get

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Speaker 3: there a whole lot quicker without destabilizing something out the

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Speaker 3: other end. Because equally, if you had, you know, some

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Speaker 3: bigger cuts, that send a pretty strong signal that we

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Speaker 3: haven't got control of the economy at the moment, and

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Speaker 3: I'd worry it could reverse out the other way. So

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Speaker 3: we've got to be a bit careful with how quick

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Speaker 3: we move.

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Speaker 4: Yeah, my go hard or go home attitude is why

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Speaker 4: I'm not the Reserve Bank governor. Hey, now, Brad Olson,

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Speaker 4: CEO of Infometrics, as part of the problem that we

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Speaker 4: seem to have this much talked about two speed economy

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Speaker 4: with the regions doing well from the experts, but the

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Speaker 4: city's being sort of hit by property downturn and various

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Speaker 4: problems with hospo, is that part of the problem for them,

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Speaker 4: that they're trying to balance those two economies.

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Speaker 3: Yeah, that's absolutely true, And look at it the metrics.

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Speaker 3: We've got some numbers actually coming up tomorrow that sort

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Speaker 3: of puts that in stark relief. The challenge as well,

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Speaker 3: though it's not even a two speed economy, it's just

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Speaker 3: that everything's very bitsy. You know, different parts of rural

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Speaker 3: and provincial centers seem to be going better, but not everywhere.

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Speaker 3: You've got some parts of tourism that are fire, others aren't.

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Speaker 3: Some parts of construction that are going all right, but

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Speaker 3: a lot of others that are really struggling to find activity.

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Speaker 3: So I think it's just that the economy sort of

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Speaker 3: moving in fits and starts at the moment, and for

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Speaker 3: a lot of businesses, what do you plan around with that?

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Speaker 3: You know, it's very very difficult to know exactly what

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Speaker 3: you're going to see what the pipeline of activity and

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Speaker 3: sales is. So yeah, everyone at the moment trying to

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Speaker 3: figure out effectively still what the new Goldilock zone is

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Speaker 3: going to be for the economy, and we're clearly not

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Speaker 3: there yet.

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Speaker 4: Well, inflation is what two point seven percent right now?

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Speaker 3: Is that correct? That's right?

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Speaker 4: So surely we can run the crank up to two

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Speaker 4: point nine and see what we can keep going with

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Speaker 4: the juice in the economy. But thank you so much

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Speaker 4: for talking to us today, Brad.

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Speaker 2: Brilliant, Thanks Tom great insights. That is Brad Olson, the

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Speaker 2: CEO of Inframetrics.

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