00:00and business correspondent david taylor joins us now from the reserve bank in sydney david g'day
00:07so what's the key takeaway for you after today's decision and that media conference from the
00:11reserve bank boss g'day joe look i think the key takeaway is that there is the potential
00:18for inflation to be consistently higher than what the reserve bank is comfortable with
00:23for the next two quarters or six months so the reserve bank wants inflation to be right smack
00:28bang in the middle of the target banner between two and three percent so two and a half percent
00:32pretty much indefinitely so on average over time to make sure that the economy can function well
00:38but when you add in the cost of electricity the price of uh you know health costs insurance premiums
00:45rents um the cost of building a new home and what the reserve bank governor said was just a little
00:51bit too much demand in the economy a little bit of excess demand in the economy you do have inflation
00:56staying a little too hot for too long but what we also learned was that the reserve bank is still
01:02assuming that core inflation that smoothed out measure of inflation will return to 2.6 percent
01:08by 2027 it's a long-range forecast but that is what the the reserve bank is thinking so it's possible
01:15that anything could happen from here in other words there could be a rate hike or a rate cut
01:20um but i think what the reserve bank governor was trying to explain this afternoon was that even
01:26though inflation is likely to get uncomfortably high for a little bit longer it will eventually
01:31reduce in the longer term and therefore it's entirely possible as well interest rates will remain
01:36where they are perhaps a little bit lower moving forward but a fair bit of caution about what lies ahead
01:42absolutely and the word uncertainty was used a lot in the state but not so much in the press conference
01:49conference but certainly in the statement and the reason for that simply is that it is unclear
01:54what the jobs market will do from here it's moved up to four and a half percent that's a little bit
02:00uncomfortably high uh for the reserve bank despite the fact that the jobs market is still pretty tight
02:05but again joe the reserve bank governor and the reserve bank board doesn't quite seem to know
02:11exactly what will happen to the jobs market it's possible they say that this was a one-off blip in
02:16september when it increased from 4.2 4.3 percent but it's entirely possible that the jobs market will
02:22ease back to where we've been used to it being a sort of in the early falls which is fine but again
02:27it's possible that it will continue to rise and you know an offshore uh shock a trade policy gone wrong
02:33or financial markets uh turbulence could all cause unemployment to rise so it's it's really
02:40unclear what the data is doing and joe that is what michelle bullock was at pains to say that
02:46they'll be data dependent every time they meet and it's very unclear uncertain what's around the
02:51corner but they're watching it very closely so should the public or the gathered media
02:56have any greater expectations about more more certain conclusions from the reserve bank or not
03:03look i think that it is too early to say whether the unemployment rate is going to rise further from
03:13here if that was certain then an interest rate cut would be imminent um so i think what the public can
03:20take from this is that interest rates are unlikely to move whether it's up or down interest rates are
03:26unlikely to move much from where they are at the moment and indeed business editor michael yander has a
03:31piece out today saying that mortgage rates the mortgage rate that you have now if you're on a
03:35standard variable rate is unlikely to change much over the next couple of years and after that look
03:41it could be up or down but the economy seems to be in some sort of balance which means if you're happy
03:47with your household budget at the moment it's not a bad place to be and you had a question for the
03:52reserve bank boss about what the u.s reserve is doing what's going on there and what was michelle
03:58bullock's take on that well at the moment in australia the reserve bank which is the equivalent
04:05of the federal reserve isn't doing much in terms of pumping money in an hour of the economy but
04:09the federal reserve which is again the u.s equivalent of our reserve bank is pumping a lot
04:14of money into the u.s banking system it pumped 50 billion dollars uh us into the banking system
04:19on friday and then again yesterday 20 billion so 70 billion all up now the reserve bank when i put
04:24that to the reserve bank governor she said well david we're also removing money from the system
04:29in terms of quantitative tightening i don't need to go into the technicals of that but quantitative
04:34tightening is removing money from the system so it's not surprising that the banks would then
04:39quickly ask for a bit more money to get by day to day um whether it is analysts that the abc have
04:45spoken to have said it could be a sign of tightening uh financial conditions in the u.s market and the early
04:51signs of a credit crunch joe michelle bullock said absolutely not okay david taylor there in sydney
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