Latest / Best of Business / Paul Bloxham: HSBC chief economist on the Reserve Bank of Australia holding rates at 3.85 percent

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Paul Bloxham: HSBC chief economist on the Reserve Bank of Australia holding rates at 3.85 percent · Best of Business

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  Speaker 1: You're listening to a podcast from News Talk ZEDB. Follow
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  Speaker 2: Right now, we'll go to Paul Block from HSBC Chief Economists.
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  Speaker 2: Because there are no rush the Aussies to move on
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  Speaker 2: the OCR There the Reserve Bank of Australia deciding today
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  Speaker 2: to hold steady at three point eighty five Paul good evening.
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  Speaker 3: Good a.
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  Speaker 2: So no rush, no rush at all.
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  Speaker 3: In fact, quite a surprise for the market because the
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  Speaker 3: market was quite convinced that the RBA was going to
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  Speaker 3: cut its policy rate today and it decided instead that
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  Speaker 3: it's got a bit of time. And in particular it's
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  Speaker 3: you know, noting that you know, they want to wait
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  Speaker 3: and see what the next CPI, the quarterly CPI reading
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  Speaker 3: looks like before they potentially deliver another cut. So they
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  Speaker 3: were prepared to wait today and sit still and wait
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  Speaker 3: for that all important information we get in a few
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  Speaker 3: weeks time.
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  Speaker 2: Is that front And well it must be frustrating for
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  Speaker 2: people who thought they might be getting a little more
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  Speaker 2: off their mortgage.
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  Speaker 3: Well that's right. If interest rates don't come down, it
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  Speaker 3: makes it a bit tougher. People have got mortgages. But
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  Speaker 3: I think the main thing that Governor was pointing out
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  Speaker 3: in the press conference and in the statement was that
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  Speaker 3: although inflation's coming down in Australia Corps inflation has only
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  Speaker 3: just had one print where we've gotten into the target band.
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  Speaker 3: So the last print was at two point nine percent.
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  Speaker 3: They target two to three and so they want to
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  Speaker 3: be really convinced that inflation's going to get to the
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  Speaker 3: midpoint of that target band and they just haven't got
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  Speaker 3: quite enough evidence to get them over the line for
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  Speaker 3: delivering another cut as yet. But she also pointed out
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  Speaker 3: that a lot of this was timing rather than direction,
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  Speaker 3: and those are the words the Governor used. That they
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  Speaker 3: still think they'll be delivering more rate cuts. They just
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  Speaker 3: think that it's not quite time yet to deliver the
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  Speaker 3: next one.
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  Speaker 2: And the fact that the board voted six to three
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  Speaker 2: in favor of the whole, what does that tell you
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  Speaker 2: about the next one.
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  Speaker 3: It's quite interesting because the Reserve Bank has never published
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  Speaker 3: board votes before. Obviously, we've got a new Monetary Policy
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  Speaker 3: Committee here in Australia and this is a new procedure
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  Speaker 3: that they will publish unattributed votes from the board. So
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  Speaker 3: it tells you that there was a healthy debate about
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  Speaker 3: the possibility of cutting, and that obviously three of the
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  Speaker 3: board members thought that they should cut and six said
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  Speaker 3: they should hold. So it's you know again, it's sort
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  Speaker 3: of this idea that it's really about timing rather than direction,
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  Speaker 3: and it wasn't obviously unanimous story for the board members.
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  Speaker 2: Yeah, what does Michelle Bollock? Every time I see her perform,
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  Speaker 2: she seems in charge, calm, measured thought. For what's the
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  Speaker 2: impression of in the eyes of the Australian public.
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  Speaker 3: Well, this is a new strategy from the RBA, if
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  Speaker 3: you think about to give a press conferences. This is
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  Speaker 3: a new thing that's been adopted by the RBA just
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  Speaker 3: in recent times. And so I think the Australian public,
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  Speaker 3: you know, is getting still getting used to and markets
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  Speaker 3: are still getting used to what this how this all works.
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  Speaker 3: The press conference is really designed to speak about what
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  Speaker 3: happened that day and why they decided what they've decided,
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  Speaker 3: and to speak to the Australian people about about why
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  Speaker 3: that decision has been made. I think the main thing
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  Speaker 3: is market participants are trying to work out how much
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  Speaker 3: of it's a communication for them versus a communication for
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  Speaker 3: the general public. And there can be nuances that are
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  Speaker 3: different for those two groups.
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  Speaker 2: Our Finance minister over here on the side of the testament,
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  Speaker 2: Paul's been talking about text potentially texting Aussie banks a
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  Speaker 2: bit more of Is that making any ways or news
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  Speaker 2: in your area.
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  Speaker 3: I haven't seen anything in Australia that much much about that.
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  Speaker 3: We've got an RB and Z meeting tomorrow obviously, so
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  Speaker 3: this is you know, we've got a big central bank
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  Speaker 3: week for the Antipodeans and like the RBA, we expect
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  Speaker 3: the RBNZ is likely to be on hold tomorrow as well.
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  Speaker 2: Yeah. No, everyone's sort of in a crauch hold position,
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  Speaker 2: aren't they. I mean, and the Fed doesn't want to
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  Speaker 2: go anywhere because they're worried that inflation will take off
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  Speaker 2: again with the tariffs and all that sort of stuff.
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  Speaker 3: That's right, So the Fed is on hold at the moment,
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  Speaker 3: and I guess they're watching all of the trade policy
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  Speaker 3: developments and they're happening day by day at the moment,
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  Speaker 3: So that's one of the features keeping the Fed on hold.
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  Speaker 3: I think for RB and ZED that the story is
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  Speaker 3: that there have been a lot of interest rate cuts
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  Speaker 3: already delivered. I think it's starting to lift growth in
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  Speaker 3: New Zealand. And the other feature is that inflation started
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  Speaker 3: to pick up a little bit recently and I think
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  Speaker 3: that's likely to keep the RB ins that on hold tomorrow.
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  Speaker 2: Yeah, yeah, I think you might be right, Paul. Thank
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  Speaker 2: you for that. Paul Block some HSBC chief economists with
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  Speaker 2: us from Australia.
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