The Reserve Bank of Australia has defied market expectations by leaving its cash rate target unchanged at 3.85 percent.
Market expectations were for the central bank to cut its rate by 25 basis points.
HSBC chief economist Paul Bloxham this came as a surprise to experts - but the central bank opted to wait ahead of the CPI release.
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Speaker 1 (00:09):
You're listening to a podcast from News Talk ZEDB. Follow
this and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
Right now, we'll go to Paul Block from HSBC Chief Economists.
Because there are no rush the Aussies to move on
the OCR There the Reserve Bank of Australia deciding today
to hold steady at three point eighty five Paul good evening.
Speaker 3 (00:30):
Good a.
Speaker 2 (00:31):
So no rush, no rush at all.
Speaker 3 (00:34):
In fact, quite a surprise for the market because the
market was quite convinced that the RBA was going to
cut its policy rate today and it decided instead that
it's got a bit of time. And in particular it's
you know, noting that you know, they want to wait
and see what the next CPI, the quarterly CPI reading
looks like before they potentially deliver another cut. So they
were prepared to wait today and sit still and wait
(00:56):
for that all important information we get in a few
weeks time.
Speaker 2 (00:59):
Is that front And well it must be frustrating for
people who thought they might be getting a little more
off their mortgage.
Speaker 3 (01:05):
Well that's right. If interest rates don't come down, it
makes it a bit tougher. People have got mortgages. But
I think the main thing that Governor was pointing out
in the press conference and in the statement was that
although inflation's coming down in Australia Corps inflation has only
just had one print where we've gotten into the target band.
So the last print was at two point nine percent.
They target two to three and so they want to
(01:25):
be really convinced that inflation's going to get to the
midpoint of that target band and they just haven't got
quite enough evidence to get them over the line for
delivering another cut as yet. But she also pointed out
that a lot of this was timing rather than direction,
and those are the words the Governor used. That they
still think they'll be delivering more rate cuts. They just
think that it's not quite time yet to deliver the
(01:47):
next one.
Speaker 2 (01:48):
And the fact that the board voted six to three
in favor of the whole, what does that tell you
about the next one.
Speaker 3 (01:53):
It's quite interesting because the Reserve Bank has never published
board votes before. Obviously, we've got a new Monetary Policy
Committee here in Australia and this is a new procedure
that they will publish unattributed votes from the board. So
it tells you that there was a healthy debate about
the possibility of cutting, and that obviously three of the
board members thought that they should cut and six said
(02:14):
they should hold. So it's you know again, it's sort
of this idea that it's really about timing rather than direction,
and it wasn't obviously unanimous story for the board members.
Speaker 2 (02:26):
Yeah, what does Michelle Bollock? Every time I see her perform,
she seems in charge, calm, measured thought. For what's the
impression of in the eyes of the Australian public.
Speaker 3 (02:37):
Well, this is a new strategy from the RBA, if
you think about to give a press conferences. This is
a new thing that's been adopted by the RBA just
in recent times. And so I think the Australian public,
you know, is getting still getting used to and markets
are still getting used to what this how this all works.
The press conference is really designed to speak about what
happened that day and why they decided what they've decided,
(02:58):
and to speak to the Australian people about about why
that decision has been made. I think the main thing
is market participants are trying to work out how much
of it's a communication for them versus a communication for
the general public. And there can be nuances that are
different for those two groups.
Speaker 2 (03:14):
Our Finance minister over here on the side of the testament,
Paul's been talking about text potentially texting Aussie banks a
bit more of Is that making any ways or news
in your area.
Speaker 3 (03:24):
I haven't seen anything in Australia that much much about that.
We've got an RB and Z meeting tomorrow obviously, so
this is you know, we've got a big central bank
week for the Antipodeans and like the RBA, we expect
the RBNZ is likely to be on hold tomorrow as well.
Speaker 2 (03:40):
Yeah. No, everyone's sort of in a crauch hold position,
aren't they. I mean, and the Fed doesn't want to
go anywhere because they're worried that inflation will take off
again with the tariffs and all that sort of stuff.
Speaker 3 (03:51):
That's right, So the Fed is on hold at the moment,
and I guess they're watching all of the trade policy
developments and they're happening day by day at the moment,
So that's one of the features keeping the Fed on hold.
I think for RB and ZED that the story is
that there have been a lot of interest rate cuts
already delivered. I think it's starting to lift growth in
New Zealand. And the other feature is that inflation started
to pick up a little bit recently and I think
(04:12):
that's likely to keep the RB ins that on hold tomorrow.
Speaker 2 (04:16):
Yeah, yeah, I think you might be right, Paul. Thank
you for that. Paul Block some HSBC chief economists with
us from Australia.
Speaker 1 (04:22):
For more from News Talk sed B, listen live on
air or online, and keep our shows with you wherever
you go with our podcasts on iHeartRadio.
You're listening to a podcast from News Talk ZEDB. Follow
this and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
Right now, we'll go to Paul Block from HSBC Chief Economists.
Because there are no rush the Aussies to move on
the OCR There the Reserve Bank of Australia deciding today
to hold steady at three point eighty five Paul good evening.
Speaker 3 (00:30):
Good a.
Speaker 2 (00:31):
So no rush, no rush at all.
Speaker 3 (00:34):
In fact, quite a surprise for the market because the
market was quite convinced that the RBA was going to
cut its policy rate today and it decided instead that
it's got a bit of time. And in particular it's
you know, noting that you know, they want to wait
and see what the next CPI, the quarterly CPI reading
looks like before they potentially deliver another cut. So they
were prepared to wait today and sit still and wait
(00:56):
for that all important information we get in a few
weeks time.
Speaker 2 (00:59):
Is that front And well it must be frustrating for
people who thought they might be getting a little more
off their mortgage.
Speaker 3 (01:05):
Well that's right. If interest rates don't come down, it
makes it a bit tougher. People have got mortgages. But
I think the main thing that Governor was pointing out
in the press conference and in the statement was that
although inflation's coming down in Australia Corps inflation has only
just had one print where we've gotten into the target band.
So the last print was at two point nine percent.
They target two to three and so they want to
(01:25):
be really convinced that inflation's going to get to the
midpoint of that target band and they just haven't got
quite enough evidence to get them over the line for
delivering another cut as yet. But she also pointed out
that a lot of this was timing rather than direction,
and those are the words the Governor used. That they
still think they'll be delivering more rate cuts. They just
think that it's not quite time yet to deliver the
(01:47):
next one.
Speaker 2 (01:48):
And the fact that the board voted six to three
in favor of the whole, what does that tell you
about the next one.
Speaker 3 (01:53):
It's quite interesting because the Reserve Bank has never published
board votes before. Obviously, we've got a new Monetary Policy
Committee here in Australia and this is a new procedure
that they will publish unattributed votes from the board. So
it tells you that there was a healthy debate about
the possibility of cutting, and that obviously three of the
board members thought that they should cut and six said
(02:14):
they should hold. So it's you know again, it's sort
of this idea that it's really about timing rather than direction,
and it wasn't obviously unanimous story for the board members.
Speaker 2 (02:26):
Yeah, what does Michelle Bollock? Every time I see her perform,
she seems in charge, calm, measured thought. For what's the
impression of in the eyes of the Australian public.
Speaker 3 (02:37):
Well, this is a new strategy from the RBA, if
you think about to give a press conferences. This is
a new thing that's been adopted by the RBA just
in recent times. And so I think the Australian public,
you know, is getting still getting used to and markets
are still getting used to what this how this all works.
The press conference is really designed to speak about what
happened that day and why they decided what they've decided,
(02:58):
and to speak to the Australian people about about why
that decision has been made. I think the main thing
is market participants are trying to work out how much
of it's a communication for them versus a communication for
the general public. And there can be nuances that are
different for those two groups.
Speaker 2 (03:14):
Our Finance minister over here on the side of the testament,
Paul's been talking about text potentially texting Aussie banks a
bit more of Is that making any ways or news
in your area.
Speaker 3 (03:24):
I haven't seen anything in Australia that much much about that.
We've got an RB and Z meeting tomorrow obviously, so
this is you know, we've got a big central bank
week for the Antipodeans and like the RBA, we expect
the RBNZ is likely to be on hold tomorrow as well.
Speaker 2 (03:40):
Yeah. No, everyone's sort of in a crauch hold position,
aren't they. I mean, and the Fed doesn't want to
go anywhere because they're worried that inflation will take off
again with the tariffs and all that sort of stuff.
Speaker 3 (03:51):
That's right, So the Fed is on hold at the moment,
and I guess they're watching all of the trade policy
developments and they're happening day by day at the moment,
So that's one of the features keeping the Fed on hold.
I think for RB and ZED that the story is
that there have been a lot of interest rate cuts
already delivered. I think it's starting to lift growth in
New Zealand. And the other feature is that inflation started
to pick up a little bit recently and I think
(04:12):
that's likely to keep the RB ins that on hold tomorrow.
Speaker 2 (04:16):
Yeah, yeah, I think you might be right, Paul. Thank
you for that. Paul Block some HSBC chief economists with
us from Australia.
Speaker 1 (04:22):
For more from News Talk sed B, listen live on
air or online, and keep our shows with you wherever
you go with our podcasts on iHeartRadio.
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