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Speaker 1: Paul Blocks, Heather duper c l pull onto much more

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Speaker 1: serious matters. Paul Block, somem HSBC chief Economists is with us. Hello,

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Speaker 1: Paul good A. Okay, so the minutes have come out

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Speaker 1: and it looks like you're getting no more rate cuts

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Speaker 1: until at least February.

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Speaker 2: Oh. Look, I think there's still a chance the RBA

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Speaker 2: could get over the line for cutting. They haven't said no,

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Speaker 2: but they're saying that they're you know, just the economy

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Speaker 2: is in an upswing where at full employment inflation is

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Speaker 2: in the upper part of the target ban. There's no

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Speaker 2: great rush for them to do anything. I think the

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Speaker 2: critical feature of this will be a couple of things.

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Speaker 2: We get some labor force numbers later this week, so

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Speaker 2: employment numbers and what they do is going to be important.

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Speaker 2: But the really important one is going to be the

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Speaker 2: quarterly CPI print that we get on the twenty ninth

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Speaker 2: of October. So that last bit of information will either

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Speaker 2: make or break the idea that the RBA gets to

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Speaker 2: cut again this year or not. I think the RBA

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Speaker 2: is near the end. I don't think that they have

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Speaker 2: a lot of reason to be cutting a lot further,

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Speaker 2: but they may yet be able to cut a little

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Speaker 2: bit further. You know, I think the RBA is setting

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Speaker 2: us up for the idea that when viewing the end,

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Speaker 2: that there isn't necessarily a good reason to be cutting

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Speaker 2: a lot further from here. And that's what I think

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Speaker 2: we got out of the minute today.

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Speaker 1: What are you expecting in the CPI print.

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Speaker 2: We think that the trim mean measure will allow the

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Speaker 2: RBA just enough room the points that it'll be a

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Speaker 2: point seven on the quarter. That's what we're looking for,

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Speaker 2: and that's the key figure to be looking for, you know,

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Speaker 2: the we'll see. I don't know what the consensus is yet,

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Speaker 2: because of course it's a couple of weeks away still,

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Speaker 2: but the RBA was looking for it to potentially at

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Speaker 2: their last set of full cast to be a point

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Speaker 2: six or a point seven about that sort of mark.

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Speaker 2: And so they're talking about the risk of some upside

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Speaker 2: surprise to that measure, and a lot of it's based

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Speaker 2: on this monthly CPI indicator that we get in Australia,

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Speaker 2: a little bit like the selected price indicators that you

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Speaker 2: get over in New Zealand. And I think it's still

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Speaker 2: early days for reading too much into those indicators because

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Speaker 2: I think they're still not necessarily that good a guide

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Speaker 2: to the final quarterly print. So that quarterly print's going

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Speaker 2: to mean a lot for Australia. The market at the

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Speaker 2: moment's pricing about a forty percent chants that the RBA

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Speaker 2: will cut in November.

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Speaker 1: What do you make about Mike ration stats which came

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Speaker 1: out yesterday.

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Speaker 2: Well, they looked very weak. I mean I think that

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Speaker 2: you know, it's pretty clear still that the labor market

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Speaker 2: is quite soggy, quite soft in New Zealand. And with that,

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Speaker 2: you're still seeing Kiwis wanting to move to Australia where

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Speaker 2: the labor market is actually still holding up pretty well.

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Speaker 2: And you know, we're basically at full employment and there's

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Speaker 2: still jobs available here for Kewis to move into. So,

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Speaker 2: you know, the thing we haven't seen happened as fast

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Speaker 2: as we might have thought was that the Kiwi economy,

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Speaker 2: the New Zealand economy, hasn't really turned around as quickly.

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Speaker 2: That GDP print in the second quarter was of course

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Speaker 2: very weak, and the RBNZ responded with their fifty basis

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Speaker 2: point cut. You know, the economy hasn't turned around quite

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Speaker 2: as quickly as we thought it might. We thought the

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Speaker 2: high dairy prices and the really sharp declient and interest

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Speaker 2: rates that we'd already seen would get things going. It's

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Speaker 2: taking a bit longer, I think than we'd anticipated. So

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Speaker 2: that's seeing the labor market were loose, and because the

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Speaker 2: labor markets wheat, people are choosing to still continue to

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Speaker 2: flow across the taskment.

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Speaker 1: Paul, correct me if I'm wrong, But I recall that

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Speaker 1: we had a discussion about the different approaches that the

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Speaker 1: rbs in and the RBA was taking, and that the

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Speaker 1: RB and Z it was going hard on just trying

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Speaker 1: to control inflation, whereas the RBA was considering inflation and

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Speaker 1: unemployment at the same time. Have we reached a point

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Speaker 1: at which we can say one approach is correct in

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Speaker 1: the other knot, or one is better.

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Speaker 2: I think we can. I think we did have that conversation.

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Speaker 2: We've had a number of times on this on this program,

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Speaker 2: and I think we were waiting to make a judgment

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Speaker 2: as to how whether it was better to lean in

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Speaker 2: really hard with interest rate rises like that the RB

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Speaker 2: and Z did and get inflation down fast, of course,

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Speaker 2: at the cost of slowing the economy down more, or

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Speaker 2: take a more gradualist approach which is what the RBA did.

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Speaker 2: They lifted rates by less slow the economy by less

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Speaker 2: and got inflation down more slowly. It took longer, but

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Speaker 2: they did get there in the end. I think, you know,

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Speaker 2: you can sit back and say that it looks as

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Speaker 2: though the RBA took a better approach. The RBA's approach

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Speaker 2: is delivered outcomes that have been a bit easier to absorb.

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Speaker 2: The economy didn't tip into a recession last year. It's

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Speaker 2: back into an economic upswing. The unemployment rate is steady

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Speaker 2: at full employment, and inflation's on target. And I guess

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Speaker 2: in New Zealand, you know, hitting the economy hard did

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Speaker 2: get inflation down, but it's brought along some costs with it,

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Speaker 2: and it's still those costs are still there. It's not

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Speaker 2: clear that the New Zealand economy is quite out of

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Speaker 2: this yet, but that upswing has gotten going solidly.

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Speaker 1: Yeah, Yeah, fascinating stuff.

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Speaker 2: Paul.

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Speaker 1: It's good to talk to you as always. Thank you

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Speaker 1: so much, mate. We'll talk to you soon. Paul Bloxham,

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Speaker 1: HSBC Chief Economist.

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