1 00:00:00,120 --> 00:00:02,920 Speaker 1: Now, the Australian Reserve Bank has held the official cash 2 00:00:03,000 --> 00:00:05,360 Speaker 1: rate at three point six percent. As we told you earlier, 3 00:00:05,920 --> 00:00:07,880 Speaker 1: the move was expected after the bank dropped the rate 4 00:00:07,920 --> 00:00:10,960 Speaker 1: by twenty five basis points in August. Paul Bloxham is 5 00:00:11,000 --> 00:00:14,360 Speaker 1: ah SPECIES chief economist and with us HI Paul good eight. 6 00:00:14,520 --> 00:00:16,320 Speaker 1: I see it's taken to some people by surprise who 7 00:00:16,360 --> 00:00:17,680 Speaker 1: were expecting a cat. 8 00:00:19,000 --> 00:00:22,239 Speaker 2: Now. I think this is pretty fairly expected that the 9 00:00:22,360 --> 00:00:25,000 Speaker 2: RBA was going to be on hold today. The market 10 00:00:25,040 --> 00:00:28,080 Speaker 2: was fully comfortable around that that the real discussion today 11 00:00:28,200 --> 00:00:30,560 Speaker 2: is not really about what was going to happen today, 12 00:00:30,640 --> 00:00:33,520 Speaker 2: but rather what sort of guidance the RBA is giving 13 00:00:33,560 --> 00:00:36,040 Speaker 2: about what they might do next and whether there are 14 00:00:36,120 --> 00:00:39,040 Speaker 2: further interest rate cuts yet to come. And I think 15 00:00:39,080 --> 00:00:41,480 Speaker 2: on that front, the RBA was a little bit more 16 00:00:42,200 --> 00:00:45,560 Speaker 2: hawkish or indicating that the RBA is just a little 17 00:00:45,600 --> 00:00:48,720 Speaker 2: bit more concerned that inflation might not continue to fall 18 00:00:48,760 --> 00:00:50,879 Speaker 2: towards the midpoint of its target fan and they were 19 00:00:50,960 --> 00:00:54,280 Speaker 2: perhaps previously so. So that that's the main thing that 20 00:00:54,320 --> 00:00:56,000 Speaker 2: I think the market's taken from today, that you know, 21 00:00:56,000 --> 00:00:58,840 Speaker 2: they're on hold today and whether there's more cuts to 22 00:00:58,880 --> 00:01:02,520 Speaker 2: come is sort of where the eight is or how 23 00:01:02,560 --> 00:01:05,040 Speaker 2: many of those rate cuts are get to come? Will 24 00:01:05,040 --> 00:01:06,800 Speaker 2: they cut in November? I guess is the big question. 25 00:01:06,920 --> 00:01:08,960 Speaker 1: Okay, what are they seeing in inflation? 26 00:01:10,040 --> 00:01:12,959 Speaker 2: Well, we got this reading last week of this sort 27 00:01:12,959 --> 00:01:17,720 Speaker 2: of indicator, this partial indicator, the monthly CPI indicator, that 28 00:01:17,840 --> 00:01:19,880 Speaker 2: was a little bit higher than the market had expected 29 00:01:19,880 --> 00:01:22,840 Speaker 2: for August, and that's been where a lot of the 30 00:01:22,880 --> 00:01:25,560 Speaker 2: focus of the discussion has been. Is that giving you 31 00:01:25,640 --> 00:01:29,120 Speaker 2: a clear signal that actually inflation might now be starting 32 00:01:29,160 --> 00:01:31,640 Speaker 2: to look a bit more persistent, Or is that indicator 33 00:01:31,680 --> 00:01:35,480 Speaker 2: which is actually really quite noisy and quite volatile, you know, 34 00:01:35,640 --> 00:01:38,600 Speaker 2: just a partial indicator. And so so you know, the 35 00:01:38,640 --> 00:01:41,080 Speaker 2: thing for the RBA is that the last reading of 36 00:01:41,120 --> 00:01:43,920 Speaker 2: the main measure they watch around at two point seven percent, 37 00:01:44,040 --> 00:01:46,399 Speaker 2: which is very much in there two to three percent 38 00:01:46,480 --> 00:01:49,920 Speaker 2: target band, of course, but they need it to really 39 00:01:50,000 --> 00:01:52,520 Speaker 2: keep heading towards the midpoint, towards two and a half. 40 00:01:52,560 --> 00:01:55,040 Speaker 2: And if it doesn't keep heading towards, then maybe they 41 00:01:55,040 --> 00:01:57,120 Speaker 2: won't be able to deliver much more easy And if 42 00:01:57,160 --> 00:01:59,560 Speaker 2: it does, you know, head towards it, then then we 43 00:01:59,640 --> 00:02:01,200 Speaker 2: might get couple more we might get a little bit 44 00:02:01,240 --> 00:02:03,280 Speaker 2: more easy from the RBA. But we're getting close to 45 00:02:03,280 --> 00:02:05,760 Speaker 2: the end. It does seem like the RBA has done 46 00:02:05,840 --> 00:02:08,240 Speaker 2: enough to get the economy to be a in an upswing. 47 00:02:08,840 --> 00:02:11,959 Speaker 2: Growth has picked up pace, we're you know, the consumers 48 00:02:11,960 --> 00:02:14,160 Speaker 2: starting to spend a bit more. Australia is in a 49 00:02:14,160 --> 00:02:15,240 Speaker 2: modest growth up swing. 50 00:02:15,440 --> 00:02:17,160 Speaker 1: Yeah, Paul, what are you expecting from the rbn Z 51 00:02:17,200 --> 00:02:17,800 Speaker 1: in next week? 52 00:02:18,960 --> 00:02:21,440 Speaker 2: Well, that is going to be very interesting. I mean, 53 00:02:21,480 --> 00:02:22,959 Speaker 2: I think they're going to cut and I think that's 54 00:02:23,000 --> 00:02:27,800 Speaker 2: fairly uncontroversial that the question is going to be how 55 00:02:27,880 --> 00:02:31,120 Speaker 2: much do they you know, take from that really weak 56 00:02:31,200 --> 00:02:34,520 Speaker 2: judyp print we got for the the last second quarter 57 00:02:34,560 --> 00:02:38,840 Speaker 2: one and do they feel the need to move even more? 58 00:02:39,000 --> 00:02:41,359 Speaker 2: And so, you know, we think that that was quite 59 00:02:41,360 --> 00:02:44,680 Speaker 2: a hefty surprise to the downside, and you know, the 60 00:02:44,800 --> 00:02:47,120 Speaker 2: rbns that had already been talking about the idea of 61 00:02:47,200 --> 00:02:50,520 Speaker 2: maybe cutting a couple more times before the end of 62 00:02:50,520 --> 00:02:53,680 Speaker 2: the year. So our leaning is that it's most likely, 63 00:02:53,720 --> 00:02:56,440 Speaker 2: we think the rbens that will probably deliver fifty basis 64 00:02:56,440 --> 00:02:59,239 Speaker 2: points next week, that they'll cut more because that that 65 00:02:59,240 --> 00:03:01,920 Speaker 2: that that print was very weak. It surprised them to 66 00:03:01,919 --> 00:03:04,000 Speaker 2: the downside. They'd already be indicating that they were going 67 00:03:04,000 --> 00:03:06,839 Speaker 2: to be cuts coming anyway, so we think that's likely. 68 00:03:07,200 --> 00:03:10,000 Speaker 2: Think we're going to get the ABENZ cutting delivering a 69 00:03:10,000 --> 00:03:10,880 Speaker 2: bigger cut next week. 70 00:03:10,919 --> 00:03:12,520 Speaker 1: Look, I stand to be corrected, but I think I 71 00:03:12,560 --> 00:03:15,320 Speaker 1: saw be in Z saying today that they are expecting 72 00:03:15,360 --> 00:03:18,760 Speaker 1: to hit two point two five in the OCR by 73 00:03:18,840 --> 00:03:21,000 Speaker 1: Christmas time. Do you think they're on the money there? 74 00:03:21,720 --> 00:03:23,840 Speaker 2: That's our view too, So we think they go fifty 75 00:03:23,880 --> 00:03:26,200 Speaker 2: basis points next week, and then they go another twenty 76 00:03:26,200 --> 00:03:28,960 Speaker 2: five basis points in November, and the cash rot would 77 00:03:28,960 --> 00:03:31,600 Speaker 2: be yes down at two twenty five by the end 78 00:03:31,600 --> 00:03:34,680 Speaker 2: of the year. Keeping in mind, you know they've had 79 00:03:34,680 --> 00:03:37,680 Speaker 2: this big downside surprise to GDP, so growth is weak 80 00:03:37,720 --> 00:03:39,400 Speaker 2: and it's clear the economy is not quite on the 81 00:03:39,480 --> 00:03:42,680 Speaker 2: right pathway. And I think the other thing in terms 82 00:03:42,720 --> 00:03:44,920 Speaker 2: of that November meeting is the second one. There's a 83 00:03:44,920 --> 00:03:47,320 Speaker 2: big gap between the November meeting and a February meeting, 84 00:03:47,400 --> 00:03:49,080 Speaker 2: So if they still feel like they need to do 85 00:03:49,120 --> 00:03:51,440 Speaker 2: a bit more even after cutting next week, that's how 86 00:03:51,480 --> 00:03:53,080 Speaker 2: we get there. So yeah, we do think there's going 87 00:03:53,160 --> 00:03:54,680 Speaker 2: to be quite a bit more easy and coming through 88 00:03:55,040 --> 00:03:56,600 Speaker 2: from the abn Z pretty soon. 89 00:03:56,800 --> 00:03:59,880 Speaker 1: Yeah, listen on that gap. It seems to be a 90 00:04:00,400 --> 00:04:02,120 Speaker 1: firming up. Is a bit of a discussion of topic 91 00:04:02,400 --> 00:04:04,920 Speaker 1: discussion here, a topic of discussion as to whether that 92 00:04:05,160 --> 00:04:07,800 Speaker 1: there should be that bigger gap between the end of 93 00:04:07,800 --> 00:04:09,240 Speaker 1: the year and the start of the year for them. 94 00:04:09,240 --> 00:04:11,600 Speaker 1: What do you think, Oh. 95 00:04:11,480 --> 00:04:13,400 Speaker 2: I think it is quite a large gap between the 96 00:04:13,600 --> 00:04:15,840 Speaker 2: last meeting for the year and the one that comes 97 00:04:15,880 --> 00:04:19,120 Speaker 2: along long in February, and so you know there's a 98 00:04:19,200 --> 00:04:22,000 Speaker 2: question there about whether the timing is right, whether whether 99 00:04:22,040 --> 00:04:23,760 Speaker 2: something should happen a bit more so a bit a 100 00:04:23,760 --> 00:04:26,680 Speaker 2: bit sooner in between. That'll be, of course for the 101 00:04:26,760 --> 00:04:29,520 Speaker 2: rbn Z to work out, especially with the new governor 102 00:04:29,640 --> 00:04:30,880 Speaker 2: governor arriving in December. 103 00:04:31,040 --> 00:04:32,320 Speaker 1: Yeah, you like the cut of her jib. 104 00:04:33,920 --> 00:04:37,200 Speaker 2: I think that, you know, it's a very highly qualified 105 00:04:38,600 --> 00:04:41,200 Speaker 2: person to come and to come and run and run 106 00:04:41,240 --> 00:04:41,800 Speaker 2: the Central Bank. 107 00:04:41,839 --> 00:04:44,560 Speaker 1: Absolutely, yeah, Paul, Thank you very much, as always appreciated. 108 00:04:44,560 --> 00:04:46,839 Speaker 1: Paul Bloxham, HSPECIES Chief Economist. 109 00:04:47,920 --> 00:04:51,120 Speaker 2: For more from Hither Duplessy Alan Drive, listen live to 110 00:04:51,200 --> 00:04:54,239 Speaker 2: news talks. 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