Latest / Early Edition with Ryan Bridge / Kelly Eckhold: Westpac Chief Economist on Australia's inflation surging to 4.6%

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Kelly Eckhold: Westpac Chief Economist on Australia's inflation surging to 4.6% · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: Inflation sparking across the Tasman four point six percent for
• 0:03
  Speaker 1: the year to March. That's up one point one percent,
• 0:05
  Speaker 1: no surprises, why market pricing now over there and eighty
• 0:09
  Speaker 1: percent chants the RBA will hike twenty five basis points
• 0:13
  Speaker 1: next week would be third on the trop for them. Kelly,
• 0:15
  Speaker 1: you're cold westpatchief economists with us this morning, Kelly, good morning,
• 0:19
  Speaker 1: good morning. We won't be as bad as they may.
• 0:23
  Speaker 2: No, the starting points are really different between New Zealand
• 0:26
  Speaker 2: and Australia. I mean, they've already got inflation in the
• 0:29
  Speaker 2: mid furs. We are projecting that it might peak here
• 0:33
  Speaker 2: at around that level based off where we are today,
• 0:36
  Speaker 2: whereas the Australians are going well over five percent.
• 0:39
  Speaker 1: What about the trimmed mean, you know when you strip
• 0:42
  Speaker 1: out your one offic volatile stuff that's basically unchanged there,
• 0:45
  Speaker 1: what does that tell us?
• 0:47
  Speaker 2: Well, I mean that's an interesting one as well, because
• 0:50
  Speaker 2: all those core inflation measures in Australia are tons higher
• 0:53
  Speaker 2: than they are here. So Tremean for example, and their
• 0:57
  Speaker 2: median inflation rate both around three and a half. And
• 1:00
  Speaker 2: this is kind of even before the big pass through
• 1:03
  Speaker 2: or the oil price shot comes through in New Zealand
• 1:06
  Speaker 2: to saving graces, they're quite a bit lower, so two
• 1:08
  Speaker 2: point three percent and one point six percent respectively in
• 1:12
  Speaker 2: New Zealand. What that tells you is that inflation coming
• 1:16
  Speaker 2: into this was much better controlled. It means that you've
• 1:21
  Speaker 2: got those three rate hikes coming in Australia. In New Zealand,
• 1:25
  Speaker 2: we've probably got some rate hikes coming to but the
• 1:27
  Speaker 2: Reserve Bank's probably got a bit longer to think about
• 1:30
  Speaker 2: way up the trade offs.
• 1:31
  Speaker 1: I think some of your colleagues are saying that July
• 1:34
  Speaker 1: you were saying September you stick in to September.
• 1:37
  Speaker 2: Why, Well, it's a very difficult situation and we don't
• 1:41
  Speaker 2: really know many of the facts. We don't really know
• 1:45
  Speaker 2: exactly where inflation is going to peak, we don't know
• 1:47
  Speaker 2: how long this war is going to last. It looks
• 1:50
  Speaker 2: pretty bleak at the moment, I have to say, but
• 1:53
  Speaker 2: we just there's too many things you don't know, And
• 1:56
  Speaker 2: in particular for the Reserve Bank, if you listen to
• 1:58
  Speaker 2: the governor's messaging says that she wants to see evidence
• 2:01
  Speaker 2: of second round price increases, and that infidence is not
• 2:05
  Speaker 2: available now, it might not even really be available until
• 2:09
  Speaker 2: we get to September. When you see that second quarter
• 2:13
  Speaker 2: CPI number, which is going to come out in late July, it's.
• 2:17
  Speaker 1: Waiting to say. I mean that she has said very
• 2:19
  Speaker 1: clearly that it's the second round that they will react to,
• 2:21
  Speaker 1: not the first wave. So as you say, we haven't
• 2:23
  Speaker 1: had it yet, what about the price of will going
• 2:25
  Speaker 1: up overnight? We're now touching cloth one hundred and twenty
• 2:28
  Speaker 1: bucks a barrel again.
• 2:30
  Speaker 2: Yeah, well looks pretty bad, doesn't it. I mean, the
• 2:33
  Speaker 2: scenarios have been running worth it's all going to be
• 2:35
  Speaker 2: finishing in a month or two look pretty unrealistic right now,
• 2:38
  Speaker 2: especially given the talk from the President overnight. I mean
• 2:42
  Speaker 2: they seem to be happy to settle in for a
• 2:44
  Speaker 2: long haul here, So that means we're all going to
• 2:47
  Speaker 2: have to redo our forecasts. I mean not only about
• 2:50
  Speaker 2: were oil peaks, but how long it stays up there
• 2:52
  Speaker 2: as well. I think it's probably reasonable to be planning
• 2:55
  Speaker 2: on the basis of at least another three months of
• 2:57
  Speaker 2: this and perhaps even have another close to look at
• 3:01
  Speaker 2: the likelihood of it goes until the end of the year.
• 3:05
  Speaker 1: Kelly you cult whispec for.
• 3:07
  Speaker 2: More from early edition with Ryan Bridge.
• 3:10
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