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Speaker 1: Brand.

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Speaker 2: Let's go to Australia. The Australian Reserve Bank has held

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Speaker 2: the official cash rate at four point one. This is

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Speaker 2: this afternoon. Interest rates heads started to come down in February,

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Speaker 2: but the bank today decided to hold off on going

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Speaker 2: any further. Paul Blocks from HSBC Tip Economists with me.

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Speaker 1: Hi Paul, good evening.

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Speaker 2: Good to have you on the show. So why is

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Speaker 2: the bank paused.

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Speaker 1: Well, we kind of thought they would for a start,

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Speaker 1: we had in mind that the market thought that they

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Speaker 1: wouldn't be doing anything today. They've given guidance back in

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Speaker 1: February that you know, although they could get over the

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Speaker 1: line for delivering that interest rate cup that we saw

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Speaker 1: back then on the eighteenth of February, they weren't likely

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Speaker 1: to deliver back to back cut, that the economy wasn't

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Speaker 1: disinflating quite quickly enough. And since then the domestic data

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Speaker 1: at least have come in line with what they had

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Speaker 1: been expecting. Growth is on a modest upswing, the labor

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Speaker 1: market is still quite tight, with the unemployment rate sideways,

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Speaker 1: and inflation's gradually easy. So they said today, you know,

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Speaker 1: inflation's coming down and that's a good that's a good thing,

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Speaker 1: but they weren't quite convince yes to be able enough

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Speaker 1: that it was going to get back to target for

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Speaker 1: them to be able to deliver another cup today.

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Speaker 2: Hell of a time to be making a big call

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Speaker 2: like that, The day before Trump's Liberation Day, we will

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Speaker 2: find out about the tariffs. Do you think that played

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Speaker 2: into it at all? I mean, you know, not wanting

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Speaker 2: to preempt a potential tariff war and what that might

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Speaker 2: mean for a recession or dare I say inflation.

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Speaker 1: So I think today's decision was largely grounded on what

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Speaker 1: was happening domestically and how the domestic story is traveling.

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Speaker 1: But I think in this statement that we got from

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Speaker 1: the RBA today, it's very clear. It's a short statement,

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Speaker 1: it had a lot of information about the fact that

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Speaker 1: they were very uncertain about the global picture and what

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Speaker 1: that might mean. So it certainly was something that the

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Speaker 1: rbable to would be watching very carefully and they'd be

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Speaker 1: thinking about or would they relayed that. You know, their

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Speaker 1: own take is that this was going to be downside

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Speaker 1: risk to global activity, so downside risk to global growth.

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Speaker 1: But they were quite clear in their statement as well,

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Speaker 1: saying that they weren't sure what it might mean for inflation,

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Speaker 1: whether it was upside or downside for inflation. So they're

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Speaker 1: watching very carefully like the rest of us, in terms

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Speaker 1: of these global developments. They're very relevant and they may

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Speaker 1: drive a Munkey policy in one direction or another. But

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Speaker 1: they're also pretty clear today that they don't really know

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Speaker 1: until they've seen more information exactly which way inflation is

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Speaker 1: likely to drive inflation. That's the view that they portrayed today.

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Speaker 2: Yeah, the other problem of courses that could go both ways.

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Speaker 2: We could have a recission and and we could have stagflation.

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Speaker 1: Well, certainly that's a risk and we need to watch

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Speaker 1: it very carefully. I think it's a risk probably more

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Speaker 1: for the US economy that we need to there. But

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Speaker 1: I think you know, if you think about what tends

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Speaker 1: to happen when there's a global downturn, it tends to

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Speaker 1: be disinflationary. And I think I think that's the main

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Speaker 1: way we're thinking about it at least, is that the

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Speaker 1: direction of risk is more likely that if it goes

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Speaker 1: poorly and the global economy slows down more, it's more

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Speaker 1: likely to be downside risk for inflation. In Australia and

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Speaker 1: New Zealand. Actually that's the way we would think about

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Speaker 1: it for New Zealand as well, because there'll be a

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Speaker 1: lot of manufactured goods that might not be going to

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Speaker 1: the markets that they previously would have out of China

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Speaker 1: and Asia and so on, and they'll be looking to

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Speaker 1: put those sell those manufactured goods into another market. And

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Speaker 1: our countries are large importers of manufactured goods, so we

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Speaker 1: may very well see, you know, there's a risk, we

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Speaker 1: think at least of more disinflation rather than the other way.

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Speaker 2: Rountd Michelle Bullock, the Governor, indicated last time we spoke

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Speaker 2: there would be two cuts this year. Did did they

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Speaker 2: give any ford given all that uncertain did they give

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Speaker 2: any forward forecast?

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Speaker 1: So the RBA doesn't actually articulate a view on what

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Speaker 1: they are going to do with monetary policy. The last

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Speaker 1: time around, what they did was they always have a

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Speaker 1: working assumption in their set of forecast about what the

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Speaker 1: market is currently pricing at that point in time, and

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Speaker 1: that's what you're relying that. That's what they did last time.

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Speaker 1: But this time around they didn't publish any forecasts because

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Speaker 1: this is a meeting that's sort of in between the

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Speaker 1: two that there was no explicit guidance. I think actually,

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Speaker 1: if anything, they were pretty light on in terms of

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Speaker 1: the guidance, and a part of that reflects, of course,

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Speaker 1: this global risk that we're talking about that actually it's

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Speaker 1: difficult to know which way things are going to go

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Speaker 1: on the inflation outlook, and so they really didn't provide

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Speaker 1: very much that much a forward guide.

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Speaker 2: All right, Paul, interesting stuff. Thanks for you analysis, Paul

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Speaker 2: Blocks and hsb C chief economist out of Sydney. For

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Speaker 2: more from Hither Duplessy Alan Drive, listen live to news talks.

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