1 00:00:00,120 --> 00:00:02,599 Speaker 1: The Reserve Bank in Australia says that it's May meeting 2 00:00:02,680 --> 00:00:05,880 Speaker 1: would be a quote opportune time to reconsider the official 3 00:00:05,920 --> 00:00:09,360 Speaker 1: cash rate. Hgspec's chief economist Paul bloxhams with US Paul, Hello, 4 00:00:10,560 --> 00:00:12,959 Speaker 1: good a. So it's a cutter mark, thanks very much. 5 00:00:12,960 --> 00:00:14,640 Speaker 1: Made appreciate it. Cut on the cards, isn't it. 6 00:00:15,400 --> 00:00:19,000 Speaker 2: I think so, yes, I think that's right. You know, 7 00:00:19,560 --> 00:00:20,599 Speaker 2: quite a lot has changed. 8 00:00:20,640 --> 00:00:23,239 Speaker 3: I mean, part of it is, of course that Australia's 9 00:00:23,239 --> 00:00:26,439 Speaker 3: inflation has been gradually coming down and this has left 10 00:00:26,480 --> 00:00:29,920 Speaker 3: the RBA with an opportunity to consider to potentially consider cutting. 11 00:00:30,200 --> 00:00:32,159 Speaker 3: But I think the major force at work now is 12 00:00:32,240 --> 00:00:34,840 Speaker 3: what's happening globally, and that's going to be the force 13 00:00:34,880 --> 00:00:38,680 Speaker 3: that overwhelms all of these local stories. I guess the 14 00:00:38,760 --> 00:00:41,839 Speaker 3: way I'm framing this is, this is what's been happening 15 00:00:41,880 --> 00:00:45,800 Speaker 3: is global is downside risk for global growth, and typically 16 00:00:46,360 --> 00:00:50,360 Speaker 3: that is disinflationary for most of the world, and I 17 00:00:50,440 --> 00:00:51,040 Speaker 3: think it's going. 18 00:00:50,960 --> 00:00:54,120 Speaker 2: To be disinflationary for Australia and New Zealand as well. 19 00:00:54,800 --> 00:00:56,880 Speaker 3: You can certainly make the case that in the short 20 00:00:56,960 --> 00:00:59,720 Speaker 3: run there might be supply disruption that plays a role 21 00:01:00,120 --> 00:01:02,240 Speaker 3: and holds up that disinflationary force. But I think the 22 00:01:02,280 --> 00:01:04,640 Speaker 3: major one is going to be that there's going to 23 00:01:04,640 --> 00:01:07,880 Speaker 3: be a lot of manufactured goods in Asia that can't 24 00:01:07,880 --> 00:01:11,360 Speaker 3: necessarily be sold into the US market, and they'll show 25 00:01:11,440 --> 00:01:12,479 Speaker 3: up in our markets instead. 26 00:01:12,520 --> 00:01:13,400 Speaker 2: So I think there's going to be a lot of 27 00:01:13,400 --> 00:01:14,760 Speaker 2: trade diversion and that's going to be. 28 00:01:14,800 --> 00:01:17,200 Speaker 3: One of the factors that puts downward pressure on inflation 29 00:01:17,280 --> 00:01:19,360 Speaker 3: allows the RBA to move a bit faster. 30 00:01:19,720 --> 00:01:22,200 Speaker 1: Do you think that the RBA is going to actually 31 00:01:22,480 --> 00:01:24,560 Speaker 1: look at what's happening globally right now and take that 32 00:01:24,600 --> 00:01:26,200 Speaker 1: into consideration or look through it. 33 00:01:27,120 --> 00:01:29,160 Speaker 3: I think the first in the first instance, by May 34 00:01:29,600 --> 00:01:32,479 Speaker 3: will know that domestic inflation in Australia is low enough 35 00:01:32,640 --> 00:01:33,280 Speaker 3: for them to be. 36 00:01:33,240 --> 00:01:34,920 Speaker 2: Able to consider cutting anyway. 37 00:01:35,280 --> 00:01:37,920 Speaker 3: But I think when you're thinking about the pathway going 38 00:01:37,959 --> 00:01:40,880 Speaker 3: forward there, they'll be considering in their own set of 39 00:01:40,920 --> 00:01:44,679 Speaker 3: forecasts that the likely risk to their forecast for inflation 40 00:01:44,840 --> 00:01:48,400 Speaker 3: is more to the downside than to the upside given 41 00:01:48,440 --> 00:01:51,000 Speaker 3: what we're seeing globally, and so I think you're. 42 00:01:50,920 --> 00:01:52,120 Speaker 2: Going to get a cut in May on the back 43 00:01:52,160 --> 00:01:53,080 Speaker 2: of the domestic. 44 00:01:52,720 --> 00:01:56,240 Speaker 3: Story, followed by and also some sense that they're they're 45 00:01:56,280 --> 00:01:58,760 Speaker 3: you know, they're happy that they're considering that they're likely 46 00:01:58,800 --> 00:02:01,600 Speaker 3: to be lowering rates further because of what's happening globally. 47 00:02:01,720 --> 00:02:05,040 Speaker 1: Yeah, how wise is it to start acting in anticipation 48 00:02:05,120 --> 00:02:06,880 Speaker 1: of what Donald Trump is going to do or how 49 00:02:06,960 --> 00:02:09,760 Speaker 1: long he may do it for because he's so unbelievably unpredictable. 50 00:02:10,440 --> 00:02:11,840 Speaker 2: Well, this is a lot of what came out of 51 00:02:11,840 --> 00:02:12,560 Speaker 2: the minutes today. 52 00:02:12,680 --> 00:02:14,880 Speaker 3: I mean, you know, when the last meeting that the 53 00:02:15,000 --> 00:02:19,480 Speaker 3: RBA had was in early April, obviously, and just before 54 00:02:20,280 --> 00:02:22,079 Speaker 3: the second of April, when we had all these big 55 00:02:22,080 --> 00:02:25,600 Speaker 3: announcements from the US administration, and the RBA wasn't prepared 56 00:02:25,600 --> 00:02:27,720 Speaker 3: to do anything because of course they didn't really know 57 00:02:27,760 --> 00:02:28,680 Speaker 3: what it was going to look like. 58 00:02:29,160 --> 00:02:31,519 Speaker 2: And so I think that's exactly why the RBA. 59 00:02:31,760 --> 00:02:33,240 Speaker 3: Part of the reason the RBA was on hold in 60 00:02:33,280 --> 00:02:36,280 Speaker 3: April was because they don't want to jump at shadows. 61 00:02:36,320 --> 00:02:37,880 Speaker 2: They want to know what's going on. 62 00:02:38,040 --> 00:02:39,520 Speaker 3: But the time we get to the main meeting and 63 00:02:39,520 --> 00:02:41,760 Speaker 3: then the ones that are subsequent to that will have 64 00:02:41,800 --> 00:02:44,680 Speaker 3: a bit more economic data that actually shows the effecta 65 00:02:44,680 --> 00:02:47,720 Speaker 3: all of these policy changes on the global economy and 66 00:02:47,760 --> 00:02:49,560 Speaker 3: then potentially the local economy as well. 67 00:02:49,720 --> 00:02:52,440 Speaker 1: Yeah, obviously my first opportunity to talk to you about 68 00:02:52,440 --> 00:02:54,320 Speaker 1: what's going on with Donald Trump and the tariffs. Is 69 00:02:54,360 --> 00:02:56,080 Speaker 1: this blowing your mind with how stupid it is. 70 00:02:57,840 --> 00:03:00,359 Speaker 3: There's a lot of change really really fast and having 71 00:03:00,400 --> 00:03:04,840 Speaker 3: pretty big implications for the overall global the overall global story, 72 00:03:04,880 --> 00:03:06,800 Speaker 3: and I think we all have to sort of reframe 73 00:03:06,840 --> 00:03:07,840 Speaker 3: how we think about things. 74 00:03:07,840 --> 00:03:09,920 Speaker 2: But I think, you know, when I think about it 75 00:03:09,960 --> 00:03:10,200 Speaker 2: in the. 76 00:03:10,120 --> 00:03:13,600 Speaker 3: Context, as I say, for Australia and New Zealand, I 77 00:03:13,639 --> 00:03:16,880 Speaker 3: think that the main forces are that it's downside risk 78 00:03:16,960 --> 00:03:22,080 Speaker 3: to global growth, but it's also likely downside risk for inflation, 79 00:03:22,480 --> 00:03:26,200 Speaker 3: and that means that the central banks should have scope 80 00:03:26,520 --> 00:03:29,000 Speaker 3: to be able to support the local economies by lowering 81 00:03:29,080 --> 00:03:29,959 Speaker 3: rates further. 82 00:03:30,200 --> 00:03:31,440 Speaker 1: It's all right, hey, Paul, good to talk to you 83 00:03:31,480 --> 00:03:32,760 Speaker 1: as always. Thank you so much for talking to you 84 00:03:32,800 --> 00:03:36,440 Speaker 1: again soon. That's Paul Bloxham, HSBC's chief economist. For more 85 00:03:36,520 --> 00:03:39,840 Speaker 1: from Hither Duplessy Alan Drive, listen live to news talks. 86 00:03:39,840 --> 00:03:43,040 Speaker 1: It'd be from four pm weekdays, or follow the podcast 87 00:03:43,120 --> 00:03:44,120 Speaker 1: on iHeartRadio.