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Speaker 1: The Reserve Bank. What are they going to do today?

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Speaker 1: They're expected to cut the OCEA by fifty basis points

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Speaker 1: to three point seventy five percent. It's locked in, they say,

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Speaker 1: as a near certainty, but of course we never know

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Speaker 1: until it actually happens. In the A and ZA chief Economists,

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Speaker 1: Sharon Zohna joins me, Good morning, Sharon, good morning. What's

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Speaker 1: going to happen?

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Speaker 2: We're also in the camp it says our cup fifty.

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Speaker 2: They stickled it really, really unusually clearly in November, which

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Speaker 2: was brave because it was a three month gap until

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Speaker 2: the actual decision. But as it happens, the data has

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Speaker 2: fallen what most peop would consider in line with their

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Speaker 2: four cuts, a few unders and overs, but overall not

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Speaker 2: challenging their narratives. So you're seeing quite a strong consensus

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Speaker 2: amongst both economists and market participants at they'll cup fifty today.

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Speaker 1: Well there's a few we're around saying don't cut it,

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Speaker 1: or just to zero point twenty five. Because food prices

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Speaker 1: are rising. In January, non tradable inflations, baked in American

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Speaker 1: inflations ticking up, is a possibility of a global trade war.

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Speaker 1: We've got global instability affecting supply chains. There's some very

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Speaker 1: real arguments to ty hoe.

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Speaker 2: There are there some very real arguments to be cautious

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Speaker 2: about the medium term outlook. But basically, what happens to

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Speaker 2: that domestic sticky inflation that the Reserve Bank really cares

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Speaker 2: about depends on where the economy was that sort of

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Speaker 2: six months ago, really, and six months ago the economy

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Speaker 2: was in a pretty dark place. So it's reasonably it's

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Speaker 2: even for the Reserve Bank to expect that domestic sensation

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Speaker 2: to continue to fall. And they don't want to overdo things.

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Speaker 2: I want to cause unnecessary pain, but also they want

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Speaker 2: to cause inflation to go out the bottom of the band.

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Speaker 2: So that's why they're comfortable cutting now. But they have

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Speaker 2: suggested that they will start to move more cautiously as

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Speaker 2: they get closer to neutral. So that's where it starts

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Speaker 2: to get interesting. Sidney five, which is where they'd be

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Speaker 2: after a fifty point cut. Is that closer to neutral?

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Speaker 2: All the next move the twenty five or fifty There

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Speaker 2: is some debate on that point.

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Speaker 1: Yeah, well, how low could they go? You're quite right.

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Speaker 1: The debate is between some people saying three point five

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Speaker 1: that'll be about it. Some people have said or it

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Speaker 1: could go as lot as three. What do you think, Yeah, some.

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Speaker 2: People are saying loud than that. I don't think the

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Speaker 2: Reserve Bank will necessarily feel the need to be dogmatic

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Speaker 2: about exactly where the OCR funishes up today. But their

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Speaker 2: last forecast suggested the OCL we go down to about three,

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Speaker 2: and I guess the market's probably assuming that they'll show

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Speaker 2: something similar today. If they show it going there only slowly,

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Speaker 2: you could see some disappointments from the market in which

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Speaker 2: tests you could actually see a little bump up and

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Speaker 2: in illestrates and exchange rates even though they're cutting. On

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Speaker 2: the other hand, if the market thinks they sound like

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Speaker 2: they're going to cut faster, you could still see reaction.

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Speaker 2: So even though they're cutting, the actual reaction on the

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Speaker 2: day will depend on what they say, their tone, their

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Speaker 2: forecast compared to what the market is expecting.

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Speaker 1: Well, I'm looking forward to what they have to say

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Speaker 1: and what they have to say about our economy right now.

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Speaker 1: Share It's always great that you wake up for us,

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Speaker 1: and I thank you. Sharon Designer is the A and

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Speaker 1: Z Chiefs Economy Chief Economists.

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Speaker 2: For more from earlier edition with Ryan Bridge, listen live

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