October 14, 2025 • 4 mins
New reports indicate the Reserve Bank of Australia won't be cutting interest rates until at least February 2026.
Employment remains high and inflation is still at target, and experts claim the central bank has no reason to do anything big.
HSBC chief economist Paul Bloxham explains further.
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Speaker 1 (00:09):
You're listening to a podcast from News Talks B Follow
this and our wide range of podcasts now on iHeartRadio.
Paul Blocks, Heather duple Cla, Well onto.
Speaker 2 (00:19):
Much more serious matters. Paul Block, some HSBC chief economist
is with us. Hello, Paul good A. Okay, so the
minutes have come out and it looks like you're getting
no more rate cuts until at least February.
Speaker 3 (00:31):
Look, I think there's still a chance the RBA could
get over the line for cutting. They haven't said no,
but they're saying that they're you know, just the economy
is in an upswing where at full employment inflation is
in the upper part of the target band. There's no
great rush for them to do anything. I think the
critical feature of this will be a couple of things.
We get some labor force numbers later this week, so
employment numbers and what they do is going to be important.
(00:53):
But the really important one is going to be the
quarterly CPI print that we get on the twenty ninth
of October. So that last bit of information will either
make or break the idea that the RBA gets to
cut again this year or not. I think the RBA
is near the end I don't think that they have
a lot of reason to be cutting a lot further,
but they may yet be able to cut a little
bit further, you know. I think the the RBA is
(01:14):
setting us up for the idea that we're nearing the end,
that there isn't necessarily a good reason to be cutting
a lot further from here. And that's what I think
we got out of the minute today.
Speaker 2 (01:22):
What are you expecting in the CPI print.
Speaker 3 (01:25):
We think that the trim mean measure will allow the
RBA just enough room the points that it'll be a
point seven on the quarter. That's what we're looking for,
and that's the key figure to be looking for, you know,
the we'll see. I don't know what the consensus is yet,
because of course it's a couple of weeks away still,
but the RBA was looking for it to potentially at
their last set of full cast to be a point
six or a point seven about that sort of mark.
(01:47):
And so they're talking about the risk of some upside
surprise to that measure, and a lot of it's based
on this monthly CPI indicator that we get in Australia,
a little bit like the selected price indicators that you
get over in New Zealand, and I think it's still
early days for reading too much into those indicators because
I think they're still not necessarily that good a guide
to the final quarterly print. So that quarterly print's going
(02:09):
to mean a lot for Australia. The market at the
moment's pricing about a forty percent chants that the RBA
will cut in November.
Speaker 2 (02:15):
What do you make of our migration stats which came
out yesterday, Well.
Speaker 3 (02:19):
They looked very weak. I mean I think that you know,
it's pretty clear still that the labor market is quite soggy,
quite soft in New Zealand. And with that, you're still
seeing Kiwi's wanting to move to Australia, where the labor
market is actually still holding up pretty well. And you know,
we're basically at full employment and there's still jobs available
(02:40):
here for Kewis to move into. So you know, the
thing we haven't seen happened as fast as we might
have thought was that the Kiwi economy, the New Zealand economy,
hasn't really turned around as quickly. That GDP print in
the second quarter was of course very weak, and the
RBNZ responded with their fifty basis point cut. You know,
the economy hasn't turned around quite as quickly as we
thought it might. We thought the high dairy prices and
(03:02):
the really sharp de client and interest rates that we'd
already seen would get things going. It's taking a bit longer,
I think than we we'd anticipated. So that's seeing the
labor market where loose, and because the labor markets wheat,
people are choosing to still continue to flow across the taskment.
Speaker 2 (03:17):
Paul, correct me if I'm wrong, but I recall it.
We had a discussion about the different approaches that the
arbyans In and the RBA was taking, and that the
RB and Z it was going hard on just trying
to control inflation, whereas the RBA was considering inflation and
unemployment at the same time. Have we reached a point
at which we can say one approach is correct in
the other knot, or one is better.
Speaker 3 (03:37):
I think we can. I think we did have that
conversation We've had a number of times on this program,
and I think we were waiting to make a judgment
as to how whether it was better to lean in
really hard with interest rate rises like that the RB
and Z did and get inflation down fast, of course,
at the cost of slowing the economy down more, or
take a more gradualist approach, which is what the RBA did.
(03:58):
They lifted rates by less, slow the economy by less,
and got inflation down more slowly. It took longer, but
they did get there in the end. I think, you know,
you can sit back and say that it looks as
though the RBA took a better approach. The RBA's approach
is delivered outcomes that have been a bit easier to absorb.
The economy didn't tip into a recession last year. It's
back into an economic upswing. The unemployment rate is steady
(04:21):
at full employment, and inflation's on target. And I guess
in New Zealand, you know, hitting the economy hard did
get inflation down, but it's brought along some costs with it,
and it's still those costs are still there. It's not
clear that the New Zealand economy is quite out of
this yet, that that upswing has gotten going solidly yet.
Speaker 2 (04:39):
Yeah, fascinating stuff.
Speaker 3 (04:40):
Paul.
Speaker 2 (04:40):
It's good to talk to you as always. Thank you
so much.
Speaker 3 (04:42):
Mate.
Speaker 2 (04:42):
We'll talk to you soon. Paul Bloxham, HSBC chief Economist.
Speaker 1 (04:48):
For more from News Talks, ed 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 Talks B Follow
this and our wide range of podcasts now on iHeartRadio.
Paul Blocks, Heather duple Cla, Well onto.
Speaker 2 (00:19):
Much more serious matters. Paul Block, some HSBC chief economist
is with us. Hello, Paul good A. Okay, so the
minutes have come out and it looks like you're getting
no more rate cuts until at least February.
Speaker 3 (00:31):
Look, I think there's still a chance the RBA could
get over the line for cutting. They haven't said no,
but they're saying that they're you know, just the economy
is in an upswing where at full employment inflation is
in the upper part of the target band. There's no
great rush for them to do anything. I think the
critical feature of this will be a couple of things.
We get some labor force numbers later this week, so
employment numbers and what they do is going to be important.
(00:53):
But the really important one is going to be the
quarterly CPI print that we get on the twenty ninth
of October. So that last bit of information will either
make or break the idea that the RBA gets to
cut again this year or not. I think the RBA
is near the end I don't think that they have
a lot of reason to be cutting a lot further,
but they may yet be able to cut a little
bit further, you know. I think the the RBA is
(01:14):
setting us up for the idea that we're nearing the end,
that there isn't necessarily a good reason to be cutting
a lot further from here. And that's what I think
we got out of the minute today.
Speaker 2 (01:22):
What are you expecting in the CPI print.
Speaker 3 (01:25):
We think that the trim mean measure will allow the
RBA just enough room the points that it'll be a
point seven on the quarter. That's what we're looking for,
and that's the key figure to be looking for, you know,
the we'll see. I don't know what the consensus is yet,
because of course it's a couple of weeks away still,
but the RBA was looking for it to potentially at
their last set of full cast to be a point
six or a point seven about that sort of mark.
(01:47):
And so they're talking about the risk of some upside
surprise to that measure, and a lot of it's based
on this monthly CPI indicator that we get in Australia,
a little bit like the selected price indicators that you
get over in New Zealand, and I think it's still
early days for reading too much into those indicators because
I think they're still not necessarily that good a guide
to the final quarterly print. So that quarterly print's going
(02:09):
to mean a lot for Australia. The market at the
moment's pricing about a forty percent chants that the RBA
will cut in November.
Speaker 2 (02:15):
What do you make of our migration stats which came
out yesterday, Well.
Speaker 3 (02:19):
They looked very weak. I mean I think that you know,
it's pretty clear still that the labor market is quite soggy,
quite soft in New Zealand. And with that, you're still
seeing Kiwi's wanting to move to Australia, where the labor
market is actually still holding up pretty well. And you know,
we're basically at full employment and there's still jobs available
(02:40):
here for Kewis to move into. So you know, the
thing we haven't seen happened as fast as we might
have thought was that the Kiwi economy, the New Zealand economy,
hasn't really turned around as quickly. That GDP print in
the second quarter was of course very weak, and the
RBNZ responded with their fifty basis point cut. You know,
the economy hasn't turned around quite as quickly as we
thought it might. We thought the high dairy prices and
(03:02):
the really sharp de client and interest rates that we'd
already seen would get things going. It's taking a bit longer,
I think than we we'd anticipated. So that's seeing the
labor market where loose, and because the labor markets wheat,
people are choosing to still continue to flow across the taskment.
Speaker 2 (03:17):
Paul, correct me if I'm wrong, but I recall it.
We had a discussion about the different approaches that the
arbyans In and the RBA was taking, and that the
RB and Z it was going hard on just trying
to control inflation, whereas the RBA was considering inflation and
unemployment at the same time. Have we reached a point
at which we can say one approach is correct in
the other knot, or one is better.
Speaker 3 (03:37):
I think we can. I think we did have that
conversation We've had a number of times on this program,
and I think we were waiting to make a judgment
as to how whether it was better to lean in
really hard with interest rate rises like that the RB
and Z did and get inflation down fast, of course,
at the cost of slowing the economy down more, or
take a more gradualist approach, which is what the RBA did.
(03:58):
They lifted rates by less, slow the economy by less,
and got inflation down more slowly. It took longer, but
they did get there in the end. I think, you know,
you can sit back and say that it looks as
though the RBA took a better approach. The RBA's approach
is delivered outcomes that have been a bit easier to absorb.
The economy didn't tip into a recession last year. It's
back into an economic upswing. The unemployment rate is steady
(04:21):
at full employment, and inflation's on target. And I guess
in New Zealand, you know, hitting the economy hard did
get inflation down, but it's brought along some costs with it,
and it's still those costs are still there. It's not
clear that the New Zealand economy is quite out of
this yet, that that upswing has gotten going solidly yet.
Speaker 2 (04:39):
Yeah, fascinating stuff.
Speaker 3 (04:40):
Paul.
Speaker 2 (04:40):
It's good to talk to you as always. Thank you
so much.
Speaker 3 (04:42):
Mate.
Speaker 2 (04:42):
We'll talk to you soon. Paul Bloxham, HSBC chief Economist.
Speaker 1 (04:48):
For more from News Talks, ed 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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