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Speaker 1: Inflation two point seven cent yesterday. It is close to

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Speaker 1: the top end of the Reserve Banks target Council rates

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Speaker 1: were your main driver. Also, you saw increases in rents, electricity, food.

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Speaker 1: Most think it'll come down, so shouldn't stop the Arbenz

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Speaker 1: from their cutting cycle. Cameron Baggery's independent economist with me

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Speaker 1: this morning. Cameron, good morning.

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Speaker 2: No, good morning?

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Speaker 1: Hey? Is it just me? Is it just winter? Everyone

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Speaker 1: feels a little bit miserable out there. When do we

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Speaker 1: start to feel better about things?

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Speaker 2: Do you think, Well, the economy slowly turning the corner,

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Speaker 2: but we're coming out of a mighty economic hole and

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Speaker 2: it looks like on the growth stakes we might have

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Speaker 2: stopped for a David Longi, a cup of tea and

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Speaker 2: the juke corter because growth doesn't look like it was

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Speaker 2: flashed them. But the main recession period was the middle

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Speaker 2: of twenty twenty four, the December quarter twenty twenty four,

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Speaker 2: the March quarter twenty twenty five. We got positive growth,

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Speaker 2: so we're moving in the right direction. But if you

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Speaker 2: look at the level of GDP, we're still well below

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Speaker 2: where we're twelve months ago. So once again, Ryan, we're

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Speaker 2: getting out of a hole. But we're still in a

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Speaker 2: bit of a hole.

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Speaker 1: And you know, we keep talking about wages are going

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Speaker 1: faster than inflation, so people are feeling richer. I mean,

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Speaker 1: I'm mute to meet someone who says that. But these

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Speaker 1: are all averages. I mean, is there a reason why?

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Speaker 1: Can we explain why people are feeling this way?

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Speaker 2: Well, this is a different economic downturn to what we've

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Speaker 2: seen for a long time. Yeah, it's been pretty deep.

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Speaker 2: The economy has not just got what's called circol damage,

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Speaker 2: i e. The Reserve Bank beat the economy up in

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Speaker 2: order to get rid of inflation. There's a pretty big

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Speaker 2: structural that's just going on at the same time. Yeah,

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Speaker 2: we've got massive problems across the educationency for infrastructure. Productivity

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Speaker 2: growth within this economy used to be one point four

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Speaker 2: percent on average per year. It's now down at zero

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Speaker 2: point three percent, which is basically zippo. So a little

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Speaker 2: wonder that people want to get out the season go

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Speaker 2: to Australia because productivity growth is a fundamental driver of

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Speaker 2: wage growth. If you're not getting productivity growth or don't

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Speaker 2: expect to see too much wage growth on the other side,

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Speaker 2: So it's the combination of that. The cyclical downturn that

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Speaker 2: we've been through, the combination with there's a whole lot

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Speaker 2: of structural issues that we still need to address. So

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Speaker 2: this economic recovery, while it's underway, is going to take

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Speaker 2: a little bit of time before people start to get

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Speaker 2: into that happy zone.

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Speaker 1: How low do you think the r being zend is

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Speaker 1: going to go and end by win.

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Speaker 2: I think they might have another twenty five up their sleeve.

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Speaker 2: The official care straight around three percent, you know, three

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Speaker 2: percent for the defecial castrade is what's called the neutral ocio.

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Speaker 2: That's with the reserve banks neither got the foot and

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Speaker 2: accelerator or the break. That's broadly where they need to be.

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Speaker 2: It's the reserve bank on holiday. If you're looking at growth,

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Speaker 2: you would say be saying the official castrade is going

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Speaker 2: sub three percent. Now that headline inflation is moving up,

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Speaker 2: and I know yesterday's number was marginally better expect than expectations,

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Speaker 2: but it's still moving up economically sensitive parts of the

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Speaker 2: economy such as constructions such as housing, the Reserve Bank

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Speaker 2: is exerting a pretty damp impact on you can't pass

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Speaker 2: on price increases, but the whole lot of administrative charges,

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Speaker 2: there's elocricy prices that are moving up, food prices are

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Speaker 2: moving up. Next quarter, we're going to see local authority

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Speaker 2: rates that are going to be moving up. Now that's

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Speaker 2: going to add I suspect a little bit of inflation persistence.

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Speaker 2: So it may well be I suspect inflation is going

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Speaker 2: to settle up around two and a half, which is

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Speaker 2: not two percent, which is what they were Reserve Bank's targeting.

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Speaker 1: Yeah, Cameron, appreciate that. Thanks for your analysis this morning,

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Speaker 1: Cameron Bagery Independent Economists.

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