00:00Well, I have to say that I was pretty pleased with the numbers myself because we were looking
00:05for a 0.6% increase in the trimmed mean, which it came out at. And I think the annual rate
00:12of 2.7% really will demonstrate to the Reserve Bank that inflation is still trending down,
00:19that their forecasts are still intact, because we know that the Reserve Bank at its next
00:25meeting will also see the next update of the RBA's own forecasts. And for the Reserve Bank to be
00:31comfortable in cutting interest rates again, I think that the forecasts need to show that
00:36inflation is still going to be continually within the 2% to 3% target band. And I do think today's
00:41data confirms that. I haven't seen the components yet, but hopefully the components will also show
00:49that some of the key areas that the Reserve Bank was worried about, like consumer non-durable goods,
00:55goods products in general, and some of those non-dwelling construction costs, that those
00:59areas are showing some signs of not picking up to a large extent. That's really been a concern of the
01:05RBA, that it doesn't want to see a second round increase in inflation. But of course, the focus
01:10for us at the moment is all on interest rates. And I mean, you said that the RBA made a mistake
01:17in July by not cutting interest rates. Does this data justify your position?
01:23Look, I think it does. I mean, of course, I'm not on the board. So, you know, I can't say that
01:31I can't necessarily speak for what was happening in the board meeting that day. And there were some
01:37descendants to the decision to hold rates steady. But we did have the June employment data,
01:44which showed a 4.3% unemployment rate. And now we've got the June quarter inflation figures,
01:50which were smack on the RBA's forecast. So if we had all this information prior to that board
01:56meeting, I think that they would have cut rates. But you know, this is just, again, like Michelle
02:00Bullock said, a question of timing. And I suppose in context, it's only really a few weeks until the
02:08next board meeting. So it's not like this is the decision to not cut rates is going to dramatically
02:15make a big impact to the economy. I think it's more just a perception that the RBA was expected
02:22to cut rates and that homeowners were looking for that rate cut. And it's just the perception
02:27to the market that perhaps the communication of the RBA is not like we would want it to be. I think
02:34that that is some of the issues with the RBA's decision to defy market and consumer expectations
02:39for not cutting rates in July. Well, market expectations, as I've just been looking while
02:44you were talking, have jumped from 80% chance of a rate cut in August to 93% now. Do you think that
02:52these numbers will mean the RBA cuts rates in a couple of weeks? Well, I don't want to say that
02:58it's a done deal because I said that last time and I was proven wrong. But I think the hurdle to not
03:04cut rates again will be extremely high at this August meeting, given that they basically said
03:09they were just waiting for the confirmation of the inflation data for it to be in line with its
03:14expectations. So I find it really hard to see them not cutting rates in August. But I think that they
03:21will still discuss the possibility of holding rates steady and what that could potentially mean
03:26for the RBA's own growth and inflation forecasts. But I do think that we are likely to see a rate cut
03:33in August. And Deanna Messina, this data, of course, is backward looking. We're nearly in August. This
03:39data only runs from April to June. Is it a risk that the RBA is lagging and running behind where it
03:49should be if we're to prevent rising unemployment and inflation getting too low? Yeah, I think that
03:57there is that risk, basically because the unemployment rate is a lagging indicator of the economy. I mean,
04:02we try and look at as many forward looking aspects of the economy as we can. For example, we do have
04:07forward looking signs of employment growth, like job vacancies and job advertisements. Some of those
04:13have slowed quite a lot, like the job advertisements, which is a flow of new entrants into the labour
04:18market. Job vacancies are more of a stock. They still remain quite elevated. So we try and sort of do
04:22our best in terms of giving the best forward looking read on the economy. But of course, there is that
04:28risk that the longer that we keep rates high, the longer that we go through this period of poor
04:33growth. Now, I don't think that we're going to go down the path of a big recession or a big downturn.
04:38The biggest risk that I really see is growth in Australia just remaining quite suboptimal and
04:43running below its potential. And that's a negative for business investment at the end of the day.
04:48And I think that's what businesses are looking for as well, the clarity around where consumer spending
04:53is going to go, where interest rates are going to settle. That will sort of set the path for business
04:57investment decisions. And that's what growth sort of flows on through from higher levels of business
05:04investment and spending and consumers as well. And very briefly, Deanna Messina, it does sound like
05:09we are likely to get an August rate cut. How many cuts are you expecting this year?
05:14We think we're going to get two more cuts this year. So August, November, and then another two
05:20in the first half of next year. So the cash rate ending at 2.85% in this cutting cycle.
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