Latest / Best of Business / Paul Bloxham: HSBC chief economist on reports claiming the RBA won't cut interest rates til 2026

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Paul Bloxham: HSBC chief economist on reports claiming the RBA won't cut interest rates til 2026 · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks B Follow
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• 0:16
  Speaker 1: Paul Blocks, Heather duple Cla, Well onto.
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  Speaker 2: Much more serious matters. Paul Block, some HSBC chief economist
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  Speaker 2: is with us. Hello, Paul good A. Okay, so the
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  Speaker 2: minutes have come out and it looks like you're getting
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  Speaker 2: no more rate cuts until at least February.
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  Speaker 3: Look, I think there's still a chance the RBA could
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  Speaker 3: get over the line for cutting. They haven't said no,
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  Speaker 3: but they're saying that they're you know, just the economy
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  Speaker 3: is in an upswing where at full employment inflation is
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  Speaker 3: in the upper part of the target band. There's no
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  Speaker 3: great rush for them to do anything. I think the
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  Speaker 3: critical feature of this will be a couple of things.
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  Speaker 3: We get some labor force numbers later this week, so
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  Speaker 3: employment numbers and what they do is going to be important.
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  Speaker 3: But the really important one is going to be the
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  Speaker 3: quarterly CPI print that we get on the twenty ninth
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  Speaker 3: of October. So that last bit of information will either
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  Speaker 3: make or break the idea that the RBA gets to
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  Speaker 3: cut again this year or not. I think the RBA
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  Speaker 3: is near the end I don't think that they have
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  Speaker 3: a lot of reason to be cutting a lot further,
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  Speaker 3: but they may yet be able to cut a little
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  Speaker 3: bit further, you know. I think the the RBA is
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  Speaker 3: setting us up for the idea that we're nearing the end,
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  Speaker 3: that there isn't necessarily a good reason to be cutting
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  Speaker 3: a lot further from here. And that's what I think
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  Speaker 3: we got out of the minute today.
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  Speaker 2: What are you expecting in the CPI print.
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  Speaker 3: We think that the trim mean measure will allow the
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  Speaker 3: RBA just enough room the points that it'll be a
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  Speaker 3: point seven on the quarter. That's what we're looking for,
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  Speaker 3: and that's the key figure to be looking for, you know,
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  Speaker 3: the we'll see. I don't know what the consensus is yet,
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  Speaker 3: because of course it's a couple of weeks away still,
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  Speaker 3: but the RBA was looking for it to potentially at
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  Speaker 3: their last set of full cast to be a point
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  Speaker 3: six or a point seven about that sort of mark.
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  Speaker 3: And so they're talking about the risk of some upside
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  Speaker 3: surprise to that measure, and a lot of it's based
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  Speaker 3: on this monthly CPI indicator that we get in Australia,
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  Speaker 3: a little bit like the selected price indicators that you
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  Speaker 3: get over in New Zealand, and I think it's still
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  Speaker 3: early days for reading too much into those indicators because
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  Speaker 3: I think they're still not necessarily that good a guide
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  Speaker 3: to the final quarterly print. So that quarterly print's going
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  Speaker 3: to mean a lot for Australia. The market at the
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  Speaker 3: moment's pricing about a forty percent chants that the RBA
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  Speaker 3: will cut in November.
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  Speaker 2: What do you make of our migration stats which came
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  Speaker 2: out yesterday, Well.
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  Speaker 3: They looked very weak. I mean I think that you know,
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  Speaker 3: it's pretty clear still that the labor market is quite soggy,
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  Speaker 3: quite soft in New Zealand. And with that, you're still
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  Speaker 3: seeing Kiwi's wanting to move to Australia, where the labor
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  Speaker 3: market is actually still holding up pretty well. And you know,
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  Speaker 3: we're basically at full employment and there's still jobs available
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  Speaker 3: here for Kewis to move into. So you know, the
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  Speaker 3: thing we haven't seen happened as fast as we might
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  Speaker 3: have thought was that the Kiwi economy, the New Zealand economy,
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  Speaker 3: hasn't really turned around as quickly. That GDP print in
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  Speaker 3: the second quarter was of course very weak, and the
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  Speaker 3: RBNZ responded with their fifty basis point cut. You know,
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  Speaker 3: the economy hasn't turned around quite as quickly as we
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  Speaker 3: thought it might. We thought the high dairy prices and
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  Speaker 3: the really sharp de client and interest rates that we'd
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  Speaker 3: already seen would get things going. It's taking a bit longer,
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  Speaker 3: I think than we we'd anticipated. So that's seeing the
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  Speaker 3: labor market where loose, and because the labor markets wheat,
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  Speaker 3: people are choosing to still continue to flow across the taskment.
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  Speaker 2: Paul, correct me if I'm wrong, but I recall it.
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  Speaker 2: We had a discussion about the different approaches that the
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  Speaker 2: arbyans In and the RBA was taking, and that the
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  Speaker 2: RB and Z it was going hard on just trying
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  Speaker 2: to control inflation, whereas the RBA was considering inflation and
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  Speaker 2: unemployment at the same time. Have we reached a point
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  Speaker 2: at which we can say one approach is correct in
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  Speaker 2: the other knot, or one is better.
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  Speaker 3: I think we can. I think we did have that
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  Speaker 3: conversation We've had a number of times on this program,
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  Speaker 3: and I think we were waiting to make a judgment
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  Speaker 3: as to how whether it was better to lean in
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  Speaker 3: really hard with interest rate rises like that the RB
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  Speaker 3: and Z did and get inflation down fast, of course,
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  Speaker 3: at the cost of slowing the economy down more, or
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  Speaker 3: take a more gradualist approach, which is what the RBA did.
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  Speaker 3: They lifted rates by less, slow the economy by less,
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  Speaker 3: and got inflation down more slowly. It took longer, but
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  Speaker 3: they did get there in the end. I think, you know,
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  Speaker 3: you can sit back and say that it looks as
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  Speaker 3: though the RBA took a better approach. The RBA's approach
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  Speaker 3: is delivered outcomes that have been a bit easier to absorb.
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  Speaker 3: The economy didn't tip into a recession last year. It's
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  Speaker 3: back into an economic upswing. The unemployment rate is steady
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  Speaker 3: at full employment, and inflation's on target. And I guess
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  Speaker 3: in New Zealand, you know, hitting the economy hard did
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  Speaker 3: get inflation down, but it's brought along some costs with it,
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  Speaker 3: and it's still those costs are still there. It's not
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  Speaker 3: clear that the New Zealand economy is quite out of
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  Speaker 3: this yet, that that upswing has gotten going solidly yet.
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  Speaker 2: Yeah, fascinating stuff.
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  Speaker 3: Paul.
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  Speaker 2: It's good to talk to you as always. Thank you
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  Speaker 2: so much.
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  Speaker 3: Mate.
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  Speaker 2: We'll talk to you soon. Paul Bloxham, HSBC chief Economist.
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