00:00Falling inflation is welcome news, but at 3.4 per cent it's still a major concern for Australia's central bank.
00:10Inflation above 3 per cent, let's be clear, is too high.
00:13We're charged to keep inflation between 2 and 3 per cent and it's currently above that.
00:18Did the November consumer price data that was out yesterday do anything to alleviate or perhaps aggravate those concerns?
00:27I think the honest truth, Michael, is that there wasn't a lot of news in the data yesterday for us.
00:34Instead, the Reserve Bank's firmly focused on quarterly inflation data that comes out at the end of this month, just before its next meeting.
00:43But the Deputy Governor says there isn't a particular number that would automatically trigger a rate rise next month.
00:50But we don't have a rule that says if it's 0.9 we hold and if it's 1 we raise or 0.7 we cut.
00:57We take a view about the whole economy.
00:59After three cuts last year, markets are pricing in expectations the cash rate will climb to 4 per cent by year's end,
01:07with around a 30 per cent chance that rate hikes will start next month.
01:11You will have people who think it's much more likely that we're going to raise rates in February
01:16and you will have people who think there's no chance in hell.
01:19While the timing of any rate hikes remains up in the air,
01:22the Reserve Bank's Deputy Governor backed up December comments from his boss that rate cuts are off the table.
01:29The likelihood, at least in the near term, of further rate cuts was probably very low.
01:35That's still true.
01:37Making 2026 an unhappy new year for any borrowers still struggling with their mortgage repayments.
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