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Speaker 1: CPI Wednesday. Welcome to it where a lot of people

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Speaker 1: hope and hold their breath that inflation are showing genuine

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Speaker 1: signs are falling, thus leading soon or rather than later,

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Speaker 1: to the Reserve Bank entering the elusive world of the

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Speaker 1: rate cut. West PAXTEF economist Kelly E. Colder is with us. Kelly,

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Speaker 1: very good morning to you morning zero point six. You're

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Speaker 1: a little higher than the others, you little dower than

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Speaker 1: the others. What's driving that?

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Speaker 2: Well, we think that the services sector inflation is still

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Speaker 2: going to remain reasonably chunky, so we're in line with

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Speaker 2: where the Reserve Bank was forecasting things would be when

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Speaker 2: they told us back in May, although probably since then

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Speaker 2: it sounds like they're maybe expecting something a little lighter.

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Speaker 1: The non tradeable worry you.

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Speaker 2: Still, that is basically what the services sector stuff is about.

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Speaker 2: I mean, obviously there's a few high profiles stickier things

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Speaker 2: like rates and insurance, which are going to take a

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Speaker 2: while to adjust, But it's all the other things in

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Speaker 2: the services sector that I'm watching particularly closely because those

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Speaker 2: have been robust now for a couple of years.

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Speaker 1: Do we see ford beyond today? In other words, the

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Speaker 1: retrospective obviously at three point six and trending down still

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Speaker 1: here now today, or three point six and sticky.

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Speaker 2: It's three point six, says, probably three point five today

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Speaker 2: and heating lower. The question is not really about whether

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Speaker 2: we're going to go down, it's about how are we

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Speaker 2: going to go down? And for the Reserve Bank, there's

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Speaker 2: a big difference between inflation being around two percent and

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Speaker 2: say two point Take the seat and say six and

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Speaker 2: nine months time.

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Speaker 1: Right, let me read you this text. See if he's right, Mike.

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Speaker 1: Since the RB dubbish pervot last week, the market's now

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Speaker 1: pricing effectively eight twenty five point rate cuts over the

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Speaker 1: next eight meetings, taking the cash rate to three point

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Speaker 1: five percent in August next year. Would you agree with

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Speaker 1: that or not?

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Speaker 2: I don't agree with that. I think that the Reserve

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Speaker 2: Bank won't be moving that fast. Even if we get

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Speaker 2: a good number today, it's still going to take a

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Speaker 2: while for that service expected to flea adjust.

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Speaker 1: So the problem being, do you see anything remarkable so

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Speaker 1: say they can't? Do you say for first we'll end

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Speaker 1: of the year, they'll cut the first cut coming at

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Speaker 1: the end of the year, or not?

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Speaker 2: Well, right now, I'm still on the early next year

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Speaker 2: in February today data though it is going to be important.

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Speaker 2: The Reserve bank tune did shift last week, and you

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Speaker 2: have to listen to that.

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Speaker 1: Okay, So the second part of that question, when they go,

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Speaker 1: they go more than once. So once twice does anything

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Speaker 1: materially change in the economy. Do we get out of

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Speaker 1: our funk or not?

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Speaker 2: Well? I think things will improve relative to the very

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Speaker 2: negative situation right now. You've got to remember that through

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Speaker 2: this year the economy has been hit with three pretty

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Speaker 2: negative factors. First, one of the banks suggested there'd be

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Speaker 2: great heights this year, which initially put things into a fund.

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Speaker 2: And then we've got a big CPI in the first quarter,

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Speaker 2: which solidified in people's minds that it was going to

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Speaker 2: take a while for interest rates to go down. Then

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Speaker 2: the Reserve Bank hitters in May with the idea that

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Speaker 2: interest rates might have to go up and certainly wouldn't

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Speaker 2: be going down until later next year. I think those

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Speaker 2: views have all shifted away now, right, so we just

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Speaker 2: about the timing things that are going to start will

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Speaker 2: be drads to be falling. That will be something that

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Speaker 2: will make households feel a bit chippier.

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Speaker 1: Okay, well, let's hope you're right. In today, we hope

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Speaker 1: you're wrong. Kelly E Cold, Westpac chief Euctonomous with us

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Speaker 1: this morning. For more from the mic Asking Breakfast listen

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