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Speaker 1: Oh cr decision out from Reserve Bank today. The consensus

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Speaker 1: from most pundits is that it's going to be left

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Speaker 1: unchanged at three point twenty five percent. Nick toughly is

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Speaker 1: asb's chief economist and.

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Speaker 2: Is with us morning, Nick, good morning here.

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Speaker 1: Reasonably complex decision actually today? Is there a chance we

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Speaker 1: get surprised?

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Speaker 2: R Locke? Is every chance you get surprised In Australia

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Speaker 2: yesterday everybody was convinced the Reserve Bank they would cut

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Speaker 2: and it remained on hold. So look, you never say never.

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Speaker 1: But you pick what staying where it is.

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Speaker 2: We are picking that the Reserve Bank remain on hold

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Speaker 2: at this meeting. We still think they will cut further,

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Speaker 2: but that they'll wait until August because you've just got

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Speaker 2: so much more information, even hopefully thing has crossed a

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Speaker 2: bit more detail around what sort of trade impacts are

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Speaker 2: likely to wash through the world as well.

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Speaker 1: Do you think I mean, see aside the fact that

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Speaker 1: they're most likely going to hold, do you think they

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Speaker 1: should actually hold today?

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Speaker 2: As I was in the governor's hot seat, I'd still

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Speaker 2: be cutting interest rates. But we are getting really near

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Speaker 2: the end and it is a tough decision. So I

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Speaker 2: think for them waiting is prudent. They're getting a lot

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Speaker 2: more data around inflation and inflation expectations, so how our

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Speaker 2: behavior gets influenced via inflation is something that's key for them.

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Speaker 2: And you do get that big run of all the

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Speaker 2: trade deadlines hopefully fingers crossed having been dealt with, and

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Speaker 2: a lot more clarity around what tariff's people face. So

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Speaker 2: in that environment, it's understandable that they will want to wait.

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Speaker 2: There's a lot more information you get over the next

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Speaker 2: six weeks.

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Speaker 1: Okay, why would you cut if they're not going to cut?

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Speaker 2: Well, if I'm probably a little bit a little bit

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Speaker 2: on the dubh side. Look, I think we're looking at

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Speaker 2: an economy weird. Look, it is very slow getting going,

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Speaker 2: and well, we do think the economy will keep picking up,

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Speaker 2: but the impact of interest rates is taking quite some

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Speaker 2: time to come through, and the housing market is evident

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Speaker 2: of that. But we are reality is we're going to

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Speaker 2: be facing inflation bouncing around between two and three percent

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Speaker 2: over the next year or so. It's not exactly low,

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Speaker 2: and that's really why the Reserve Bank in when they

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Speaker 2: are in the hot seat and have to make the decisions,

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Speaker 2: why they are a little bit wary at the moment.

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Speaker 1: Okay, so I see that the guys at A and

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Speaker 1: zqulling two point five percent. That's where we bottom out

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Speaker 1: early next year, around about February. What about you? What

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Speaker 1: do you think?

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Speaker 2: We think three percent? So it's really one more cut,

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Speaker 2: But reality is you could conceivably end up anywhere between

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Speaker 2: where we are now three and a quarter and two

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Speaker 2: and a half. It really depends on how those risks

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Speaker 2: around trade go and how much of an issue the

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Speaker 2: sort of spark in inflation that we're seeing this year

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Speaker 2: will actually be. So we do think this scope for

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Speaker 2: further cuts, but we're getting near the end of the

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Speaker 2: reserve banks run of cutting rates from what was a

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Speaker 2: pretty high level.

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Speaker 1: Good stuff, Nick, good to talk to you. Thank you,

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Speaker 1: Nick Tuffley asb Chief Economist. For more from the Mic

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Speaker 1: Asking Breakfast, listen live to news talks that'd be from

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