Latest / Best of Business / Brad Olsen: Infometrics Principal Economist ahead of tomorrow's OCR update (1)

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Brad Olsen: Infometrics Principal Economist ahead of tomorrow's OCR update (1) · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talks. The'd be
• 0:12
  Speaker 1: follow this and our wide range of podcasts now on iHeartRadio. Now.
• 0:17
  Speaker 2: Obviously, the countdown is on right now for the most
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  Speaker 2: highly anticipated Reserve Bank decision in quite some time. Economists
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  Speaker 2: are pretty divided on whether the Bank's going to cut
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  Speaker 2: or hold the OCR At two tomorrow afternoon, Infametric's principle
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  Speaker 2: economist Brad Olsen is with me, Hey, Brad, good evening.
• 0:32
  Speaker 2: Let me get this right. You don't think they're going
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  Speaker 2: to cut, but you think they should cut. Is that right?
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  Speaker 3: Yeah? I mean that's broadly in the right ballpark. I
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  Speaker 3: mean we think that, you know, the economy is clearly
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  Speaker 3: weaker on most of the data that we would have
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  Speaker 3: come through in the economy the last couple of months,
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  Speaker 3: we would probably say enough is enough and it's time
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  Speaker 3: to cut. But we don't think they will, and in
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  Speaker 3: a sense almost don't think they can, given how much
• 0:56
  Speaker 3: of a you tune they're taking. But what I think
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  Speaker 3: they will do, and certainly what I think they should
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  Speaker 3: do tomorrow given all of that, is they need to
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  Speaker 3: make it pretty clear that they got it wrong and
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  Speaker 3: may they were completely and utterly wrong. They need to
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  Speaker 3: shift the dial, and they need to start so of
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  Speaker 3: setting that the groundwork for making a move before the
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  Speaker 3: end of the year. I don't know if that's October
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  Speaker 3: or if it's November. Probably almost should be October, but
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  Speaker 3: they've had some communication issues in recent times. I mean,
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  Speaker 3: it is a little bit bizarre, right that, you know,
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  Speaker 3: economists talk about whether or not a decision is live
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  Speaker 3: or not could we get a change. You go back
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  Speaker 3: to where they were in May, and honestly, there was
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  Speaker 3: no hope of a change up or down in a
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  Speaker 3: sense for another year. Now we're talking about it like
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  Speaker 3: it could be, you know, locked in the markets of price.
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  Speaker 3: I think sort of a seventy percent expectation that you
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  Speaker 3: could see the official cash rate fall tomorrow. Economists seem
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  Speaker 3: to be a little bit more circumspect about that. But
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  Speaker 3: long story short, the economy is in a darker place,
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  Speaker 3: but the Reserve Bank backs it south into a corner,
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  Speaker 3: and so sort of all bets are off at the moment.
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  Speaker 2: Okay, so let me get this right. Tomorrow is a
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  Speaker 2: monetary policy statement where they actually give a press conference.
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  Speaker 3: Yes, yes, so they give it the whole kid in
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  Speaker 3: kaboodle of November. Yes, that's correct, but not October.
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  Speaker 2: So listend, they can't they literally cannot hold the country
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  Speaker 2: in this nonsense for six weeks extra or whatever it is,
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  Speaker 2: because they're not holding a press conference. So is it possible,
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  Speaker 2: which is what the discussion has been about, why they
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  Speaker 2: can't cut in October because then they can't hold a
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  Speaker 2: press conference. They just issue a press release. Can they
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  Speaker 2: give a full press conference tomorrow where they set it
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  Speaker 2: up beautifully for October and then just do it via
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  Speaker 2: a press release in October? Is that possible?
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  Speaker 3: I think it is possible, and you know, in our
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  Speaker 3: minds we are starting to wonder if that might be
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  Speaker 3: the better move. Because you're right. I mean, so tomorrow
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  Speaker 3: you get at two pm, you get the decision, but
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  Speaker 3: you also get everything. You get all of the new
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  Speaker 3: forecasts from the Reserve Bank. You get pages and pages
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  Speaker 3: of analysis and understanding not only of what they think
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  Speaker 3: their official cash rate could be over the next sort
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  Speaker 3: of two years, but also what they think happens to
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  Speaker 3: inflation in the economy and similar. An hour later, at
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  Speaker 3: three pm, the Governor will be standing out there two media,
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  Speaker 3: speaking for nearly an hour on all of those views,
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  Speaker 3: and then like you say, in October, you get like
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  Speaker 3: a page or two, and so I think you're right,
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  Speaker 3: this is where the setup needs to happen. Now if
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  Speaker 3: they don't do that, and I think, you know, we're
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  Speaker 3: still holding our breath at informetrics, we're not going to
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  Speaker 3: make a change until tomorrow afternoon, when we understand we're
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  Speaker 3: on earth. The bank has landed on all of this,
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  Speaker 3: because how many times have they done this? It flip
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  Speaker 3: flopp between sort of hot and cold and hot and cold,
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  Speaker 3: hot and cold. So we are really sort of trying
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  Speaker 3: to figure out what happens there. But once we know,
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  Speaker 3: that's when I think we'll make a bit of a
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  Speaker 3: stronger call on what comes through. Regardless, I think they
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  Speaker 3: need to acknowledge tomorrow that they got it wrong at
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  Speaker 3: some point along the way, but it is important. I
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  Speaker 3: think that if they want to go in October, they
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  Speaker 3: need to set that ground work up. Otherwise we might
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  Speaker 3: well come through to November and all of a sudden
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  Speaker 3: they have to go with a fifty basis point cup
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  Speaker 3: because all of a sudden things have moved sort of
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  Speaker 3: too much.
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  Speaker 2: Further on, Brad, you make some excellent points, mate, Thank
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  Speaker 2: you so much, really, looking forward to talking to you
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  Speaker 2: again about this. Brad Olson infometrics principle economist. Put that
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  Speaker 2: in your diary for two o'clock tomorrow and you can
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  Speaker 2: tune in and see rat Adri and go particularly red
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  Speaker 2: in the face. He's naturally quite florid, but I think
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  Speaker 2: when the journalists start giving him a hard time tomorrow,
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  Speaker 2: he's going to be going to He's going to read
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  Speaker 2: write up, is going to go full.
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  Speaker 3: Tomato on us.
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