Below is an interview with Sky News’ Sharri Markson and Judo Bank’s Warren Hogan discussing Tuesday’s decision by the RBA to keep the official cash rate on hold, among other topics:
In the interview, I reaffirmed my position that the RBA will cut rates in the second half as inflation falls globally and the economy weakens.
Below are key highlights.
Edited Transcript:
The decision played out pretty much as everyone expected. Inflation is falling. That’s pretty clear. The RBA noted that it’s too high, so they have given themselves some wiggle room.
The statement was a little bit more dovish than the previous one, which means that it’s a little bit less likely to raise rates.
I think it’s taken the right approach. Basically, what the RBA said today was they’re going to wait for the data to see how it pans out. And if it continues to weaken, you know they potentially might cut.
They didn’t say that explicitly, but that’s the implication.
At the same time, if it ends up being firmer, then they could raise rates again.
So, they are pretty much sitting on the fence, which I think is the right approach and the sensible thing to do.
The RBA did lower their inflation forecast from the previous statement. So, at the end of the year, they were saying it was going to be 3.5%. Now it’s 3.2% at the end of the year.
I honestly think that it’s going to fall quicker than people think.
We’ve got inflation falling across the globe, mostly driven by goods, but also the whole energy price inflation that we had, which has been one of the drivers, is now coming off as well.
So, I’m still tipping rate cuts in the second half of the year.
