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 (00:00):
Right now, we'll go to Paul Blocks 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,
good a.
Speaker 2 (00:14):
So no rush, no rush at all.
Speaker 3 (00:17):
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
(00:39):
for that all important information we get in a few
weeks time.
Speaker 1 (00:42):
Is that front and well it must be frustrating for
people who thought they might be getting a little more
off their mortgage.
Speaker 2 (00:48):
Well that's right.
Speaker 3 (00:49):
If interest rates don't come down, it makes it a
bit tougher for people who've got mortgages. But I think
the main thing the Governor was pointing out in the
press conference and in the statement was that although inflation's
coming down in Australia. Yeah, corp 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
be really convinced that inflation's going to get to the
(01:11):
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.
Speaker 2 (01:18):
But she also pointed out that a lot of this.
Speaker 3 (01:20):
Was timing rather than direction, and those were 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 next one.
Speaker 1 (01:31):
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 (01:36):
It was 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
(01:57):
said they should hold. So it's, you know again 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 1 (02:09):
Yeah, what is 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 (02:20):
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.
Speaker 2 (02:29):
And so I think.
Speaker 3 (02:29):
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, 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
(02:51):
versus a communication for the general public, and there can
be nuances that are different for those two groups.
Speaker 1 (02:57):
Our Finance Minister over here on the out of the Testament.
Paul's been talking about text potentially texting Aussie banks a
bit more. Is that making any ways or news in
your area.
Speaker 3 (03:08):
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 (03:23):
Yeah.
Speaker 1 (03:24):
No, everyone's sort of in a cratch 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 (03:34):
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.
Speaker 2 (03:41):
So that's one of the features keeping the Fed on hold.
Speaker 3 (03:44):
I think for RB and ZED that the story is
that there have been a lot of interest rate cuts
already delivered.
Speaker 2 (03:49):
I think it's starting to lift growth in New Zealand.
Speaker 3 (03:52):
And the other feature is that inflation started to pick
up a little bit recently, and I think that's likely
to keep the rb inst on hold tomorrow.
Speaker 1 (03:59):
Yeah, yeah, I think you might be right, Paul. Thank
you for that. Paul Block. Some HSBC chief economists with
us from Australia. For more from Hither Duplessy Allen Drive,
listen live to news talks. It'd be from four pm weekdays,
or follow the podcast on iHeartRadio.
Right now, we'll go to Paul Blocks 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,
good a.
Speaker 2 (00:14):
So no rush, no rush at all.
Speaker 3 (00:17):
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
(00:39):
for that all important information we get in a few
weeks time.
Speaker 1 (00:42):
Is that front and well it must be frustrating for
people who thought they might be getting a little more
off their mortgage.
Speaker 2 (00:48):
Well that's right.
Speaker 3 (00:49):
If interest rates don't come down, it makes it a
bit tougher for people who've got mortgages. But I think
the main thing the Governor was pointing out in the
press conference and in the statement was that although inflation's
coming down in Australia. Yeah, corp 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
be really convinced that inflation's going to get to the
(01:11):
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.
Speaker 2 (01:18):
But she also pointed out that a lot of this.
Speaker 3 (01:20):
Was timing rather than direction, and those were 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 next one.
Speaker 1 (01:31):
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 (01:36):
It was 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
(01:57):
said they should hold. So it's, you know again 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 1 (02:09):
Yeah, what is 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 (02:20):
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.
Speaker 2 (02:29):
And so I think.
Speaker 3 (02:29):
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, 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
(02:51):
versus a communication for the general public, and there can
be nuances that are different for those two groups.
Speaker 1 (02:57):
Our Finance Minister over here on the out of the Testament.
Paul's been talking about text potentially texting Aussie banks a
bit more. Is that making any ways or news in
your area.
Speaker 3 (03:08):
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 (03:23):
Yeah.
Speaker 1 (03:24):
No, everyone's sort of in a cratch 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 (03:34):
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.
Speaker 2 (03:41):
So that's one of the features keeping the Fed on hold.
Speaker 3 (03:44):
I think for RB and ZED that the story is
that there have been a lot of interest rate cuts
already delivered.
Speaker 2 (03:49):
I think it's starting to lift growth in New Zealand.
Speaker 3 (03:52):
And the other feature is that inflation started to pick
up a little bit recently, and I think that's likely
to keep the rb inst on hold tomorrow.
Speaker 1 (03:59):
Yeah, yeah, I think you might be right, Paul. Thank
you for that. Paul Block. Some HSBC chief economists with
us from Australia. For more from Hither Duplessy Allen Drive,
listen live to news talks. It'd be from four pm weekdays,
or follow the podcast on iHeartRadio.
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