Mark Bouris and economist Stephen Koukoulas return for their monthly discussion before the RBA Board and their new Governor meets on Tuesday, September 5th where they will announce whether or not to keep the official cash rate on hold again at 4.10%.
Stephen Koukoulas is a highly regarded economic visionary who brings his knowledge, wit and common sense approach to the analysis of Australia’s current economy and financial markets.
In this episode of Property Insights, he and Mark Bouris return for their monthly discussion before the RBA Board and their new Governor meet on Tuesday, September 5th, where they will announce whether or not to keep the official cash rate on hold again at 4.10%.
Key Takeaways:
- Are there changes ahead for the RBA? Mark wonders if the RBA review recommendations and the new RBA (Reserve Bank Australia) governor’s recent statements, particularly those regarding a 4.5 percent unemployment target and climate change’s potential impact on inflation, herald a new approach but Kouky doesn’t see such concerns impacting inflation data too much.
- ‘Goldilocks’ wages growth eases concerns that low unemployment would feed into higher wages and then into higher inflation.
- The labour market is starting to slow down as evidenced in the fall of employment, increase in unemployment rate (3.5 to 3.7), and fall in job vacancies and advertisements.
- ‘The services inflations are a real problem.’ Kouky and Mark discuss air fares, and restaurant/hotel cost hikes as typical examples of inflationary business and policy behaviour that is impacting Australians unfairly.
- While Mark highlights that demand and affordability are not in line yet, he and Kouky put the housing market at neutral as recent data suggests that more supply is coming onto the market. Rent remains ‘out of control’ and is going to continue to influence the inflation number for at least a year.
- Many economic factors have finally reached easing or neutral positions: commodity prices, the stock market, business investment and business confidence are all doing ok, while building approvals, retail sales, and consumer sentiment are pretty low.
- Both Mark and Kouky think rates will stay where they are, with all checklist indicators pointing to the possibility that the next rate move is down sometime in 2024 when inflation gets back to neutral or easing.
