Mark Bouris and economist Stephen Koukoulas return for another deep dive before the Reserve Bank meets again on Tuesday, August 1st, where they’ll once again decide whether or not to keep Australia’s cash rate target on hold at 4.10%.
Stephen Koukoulas is an Australian economist and financial expert who joins us each month on Property Insights. With a career spanning 30 years across a variety of distinguished roles in the finance and government arenas, Koukoulas is known for his frank analysis and on-point commentary around topics such as monetary policy, inflation, housing market, and employment.
Join Mark and Stephen in this episode of Property Insights to break down the current global and local changes affecting our economy and how these impact the RBAs upcoming decision.
Key Takeaways:
- Australia’s inflation is decreasing. Imported inflation from countries such as the US and China is also declining, leading to speculation that the RBA may slow down rate hikes. What is imported inflation? To oversimplify: If prices of goods that we import from other economies like China or the U.S. are increasing due to domestic inflation in those countries, then the price of those goods will increase in Australia as well.
- The international economy is slowing down overall with inflation slowing and some countries in recession. What’s it mean? Australia’s inflation should continue to lower over the next few months.
- Domestically, the data from the retail sector is “grim” and consumer sentiment remains low as mortgage repayments bite. Kouky and Mark take a look at the more local factors still in play, and suggest that while some domestic factors remain a concern, overall our economic momentum has been positive and the RBA may hold or slow down interest rate hikes in response.
- The RBA is still focusing on unemployment rates. Mark and Kouky debate the RBAs prioritisation of a 4.5% unemployment rate based on NAIRU – the theoretical relationship between unemployment rates and wages increase. What’s NAIRU? Click here.
- Kouky runs through his monetary policy checklist to consider the likelihood of the RBA holding – will the latest inflation rate and deceleration of the global economy encourage the RBA to hold or do factors such as high wages and low unemployment rates mean another hike.
