1 00:00:00,120 --> 00:00:03,480 Speaker 1: The cutting cycle continues. This morning, economists expecting the Reserve 2 00:00:03,520 --> 00:00:05,720 Speaker 1: Bank to cut the OCR twenty five basis points. That'll 3 00:00:05,720 --> 00:00:07,880 Speaker 1: get us down to three percent. We'll also get a 4 00:00:07,880 --> 00:00:11,640 Speaker 1: deeper look into inflation unemployment. There we get a monetary 5 00:00:11,640 --> 00:00:14,200 Speaker 1: policy statement, which basically means you get a bit more 6 00:00:14,240 --> 00:00:17,239 Speaker 1: meat on the bones. Kelly Ekol, there's Westpac chief economs 7 00:00:17,280 --> 00:00:20,840 Speaker 1: with me this morning. Good morning, good morning. So yes, 8 00:00:20,920 --> 00:00:23,360 Speaker 1: we will get a twenty five basis point cut today, 9 00:00:23,440 --> 00:00:26,760 Speaker 1: say most economists, how far? How many more you reckon? 10 00:00:28,040 --> 00:00:29,960 Speaker 2: Well after that, I think they're going to be a 11 00:00:29,960 --> 00:00:34,040 Speaker 2: bit more cagey. I think they'll have a bias towards 12 00:00:34,080 --> 00:00:38,120 Speaker 2: looking at another ingistrate cut. But I think that's probably 13 00:00:38,200 --> 00:00:42,239 Speaker 2: about it for now. There might be another one in 14 00:00:42,280 --> 00:00:46,600 Speaker 2: them depending on how the data rolls between now and Christmas, 15 00:00:46,840 --> 00:00:50,440 Speaker 2: but I think that's probably about all we should reasonably 16 00:00:50,520 --> 00:00:51,400 Speaker 2: expect for now. 17 00:00:52,000 --> 00:00:53,479 Speaker 1: They don't want to go too low and then and 18 00:00:53,560 --> 00:00:54,680 Speaker 1: risk over cooking later. 19 00:00:55,960 --> 00:00:57,920 Speaker 2: Well, that's right. I mean, if you've looked at the 20 00:00:57,920 --> 00:01:01,200 Speaker 2: commentary in the Reserve Bank couple of meetings, you've said 21 00:01:01,200 --> 00:01:04,360 Speaker 2: there's been arguments on both sides of this. Now, there 22 00:01:04,440 --> 00:01:06,399 Speaker 2: was somebody who didn't even want to do the last cut, 23 00:01:07,480 --> 00:01:09,680 Speaker 2: and then there's a couple of others talking about, well 24 00:01:09,720 --> 00:01:11,560 Speaker 2: if we do a little bit more cutting, then we 25 00:01:11,680 --> 00:01:15,640 Speaker 2: put a bit more guard rails against weaker growth. We know, 26 00:01:15,680 --> 00:01:17,520 Speaker 2: when you've got those sort of debates going on, it 27 00:01:17,560 --> 00:01:20,120 Speaker 2: isn't a slam duck that you just keep on getting 28 00:01:20,160 --> 00:01:20,679 Speaker 2: our rates. 29 00:01:21,120 --> 00:01:23,440 Speaker 1: That's the fact that we've got a temporary you know, 30 00:01:23,520 --> 00:01:26,200 Speaker 1: the Reserve Bank, and we've got Christian hawksby and there 31 00:01:26,200 --> 00:01:27,959 Speaker 1: the fact we haven't got a permanent replacement. Does that 32 00:01:28,000 --> 00:01:30,039 Speaker 1: mean that they'll be more cautious or is that just talk? 33 00:01:31,360 --> 00:01:35,280 Speaker 2: Well, I think you should probably reasonably assume that they 34 00:01:35,520 --> 00:01:40,000 Speaker 2: can't tie themselves into a future strategy too much because 35 00:01:40,160 --> 00:01:41,880 Speaker 2: you know, if there's a new boss coming in a 36 00:01:41,880 --> 00:01:43,640 Speaker 2: couple of months, well they need to tell our a 37 00:01:43,640 --> 00:01:45,440 Speaker 2: little bit of room for them to work out what 38 00:01:45,480 --> 00:01:48,640 Speaker 2: they want to do. But you know, the data itself 39 00:01:48,680 --> 00:01:52,840 Speaker 2: also doesn't lendure just being too committed about what happens next, 40 00:01:53,160 --> 00:01:55,200 Speaker 2: because you don't know how things are going to evolve. 41 00:01:55,280 --> 00:01:57,280 Speaker 2: So hence that's why I think they should be just 42 00:01:57,320 --> 00:01:58,000 Speaker 2: a bit cagy. 43 00:01:58,480 --> 00:02:02,160 Speaker 1: We've had positive signs from manufacturing and services just in 44 00:02:02,200 --> 00:02:05,720 Speaker 1: the last week, and they are you know, the high 45 00:02:05,720 --> 00:02:08,880 Speaker 1: frequency data that you talk about. Do you think these 46 00:02:08,919 --> 00:02:12,320 Speaker 1: are positive enough? Are we finally cracking the back of 47 00:02:12,560 --> 00:02:14,280 Speaker 1: this blip in our recovery? 48 00:02:15,560 --> 00:02:18,240 Speaker 2: Oh? I think it's encouraging. I mean what we sort 49 00:02:18,240 --> 00:02:20,720 Speaker 2: of saw was some actually pretty decent growth right at 50 00:02:20,760 --> 00:02:23,400 Speaker 2: the start of the year. If you sort of were 51 00:02:23,440 --> 00:02:25,600 Speaker 2: talking to me about six weeks ago, would have looked 52 00:02:25,600 --> 00:02:28,919 Speaker 2: a lot more negative than that. Probably looks like it's 53 00:02:28,919 --> 00:02:32,280 Speaker 2: somewhere in the middle now, So we're expecting to be 54 00:02:32,320 --> 00:02:36,560 Speaker 2: back onto that kind of path of trend growth quite soon. 55 00:02:36,760 --> 00:02:38,880 Speaker 2: This sort of indicators have seen the last month or 56 00:02:38,880 --> 00:02:43,440 Speaker 2: so encouraging science that that's still a good view to have. 57 00:02:43,680 --> 00:02:46,920 Speaker 1: Was reading yesterday that in order to hit the Reserve 58 00:02:47,000 --> 00:02:51,240 Speaker 1: Bank estimates for growth this year, the manufacturing and the 59 00:02:51,280 --> 00:02:54,600 Speaker 1: services indicators need to be fifty three. I mean, obviously 60 00:02:54,919 --> 00:02:58,040 Speaker 1: fifty and above is growing, and we had services still 61 00:02:58,040 --> 00:03:01,480 Speaker 1: below fifty but improving manufacturing and finally cracked it. To 62 00:03:01,560 --> 00:03:04,040 Speaker 1: hit those we need to hit fifty three. Is that true? 63 00:03:04,919 --> 00:03:07,919 Speaker 2: Oh? I think that's a pretty rough estimate, to be honest, right, 64 00:03:08,240 --> 00:03:11,120 Speaker 2: I don't really abide by those sorts of numbers. A 65 00:03:11,200 --> 00:03:14,040 Speaker 2: few draw graphs of these sorts of things against growth, 66 00:03:14,120 --> 00:03:17,720 Speaker 2: you'll see that it's a rougher relationship than that. I mean, 67 00:03:17,760 --> 00:03:22,440 Speaker 2: if I look at where those purchasing manager indices are there, 68 00:03:22,480 --> 00:03:25,480 Speaker 2: if you average them out, then they're probably not too 69 00:03:25,560 --> 00:03:27,640 Speaker 2: far short of where they were in the first quarter, 70 00:03:27,720 --> 00:03:30,360 Speaker 2: and we got zero point eight percent growth in that quarter, 71 00:03:30,400 --> 00:03:33,440 Speaker 2: which is enough basically right now. 72 00:03:33,600 --> 00:03:36,200 Speaker 1: Good stuff, Kelly, appreciate your time this morning. Kelly echoled 73 00:03:36,280 --> 00:03:37,520 Speaker 1: westpacchief economists. 74 00:03:38,280 --> 00:03:41,280 Speaker 2: For more from earlier edition with Ryan Bridge. Listen live 75 00:03:41,400 --> 00:03:42,160 Speaker 2: to news Talks. 76 00:03:42,160 --> 00:03:45,440 Speaker 1: It'd be from five am weekdays, or follow the podcast 77 00:03:45,480 --> 00:03:46,320 Speaker 1: on iHeartRadio.