00:00So the market's roughly centred at or slightly below what the Reserve Bank is thinking for the trimmed, that underlying inflation at 0.7%, which would bring the underlying rate just below, as you mentioned, just below that target, the upper band of 3%.
00:18And that's obviously what the Reserve Bank is looking very closely at ahead of the next board meeting in mid-May to decide whether we get an extra rate cut this year or this quarter.
00:31And so back in that target band, how long has it been since we've been there?
00:36It's been a couple of years, more than a couple of years, in fact, since we've been there.
00:40Of course, the headline number, which is kind of what most people might think about, because that's everything that's in the basket.
00:47That's already been below 3% for a couple of quarters now, mainly because of things like the government's energy policy rebate, which, of course, is about to unwind, although depending on who wins the election, that might continue.
01:02So there's a lot of noise in these numbers, and that's why the Reserve Bank looks at what they call the underlying rate.
01:10There's also some really different things happening in different sectors.
01:13So services price inflation is a little bit higher.
01:18Things, you know, like the hairdressers and vets, what the RBA usually calls out, those services, insurance as well, have been running much higher than goods price inflation, which is back around the low 1%.
01:31So things like clothes, you know, things you might buy for your household, those have been quite heavily discounted, because, of course, we had tight interest rates for such a long period of time.
01:42Consumer demand's been very low, and there's been more discounting and less ability to pass on prices in that goods sector.
01:48And that noise around inflation and, you know, the effect that it could have, do you expect, as NAB does, that CPI will largely take a backseat to this rising global uncertainty as Trump's tariffs do or do not take effect?
02:02Yeah, it's a really interesting question, because the RBA has made it clear that, you know, whilst they see issues with what Trump is doing, and clearly global growth is going to slow, we saw the IMF cut Australia's growth forecast for next year, or this year, rather, sorry, from 2.1% to 1.6%.
02:22That's very weak growth. So it seemed to have a meaningful impact here. The RBA had been saying less of an impact, but we haven't seen their updated forecasts.
02:32We'll see those again. They'll be released with a statement on monetary policy that comes with the board meeting in May.
02:39It's hard to... We know that they're worried, obviously, more worried than they have been about slower growth and perhaps slightly higher unemployment,
02:48but they are also fiercely targeted on getting inflation sustainably back into the target.
02:54And they still see some risks there. They think the labour market is tight, that wages, therefore, will continue to rise perhaps a little bit more strongly than they'd like, given productivity is so low.
03:06So whilst I think we absolutely should be getting another quarter of a point off our interest rates in a couple of weeks' time,
03:13it's... You know, you can't say that it's done and dusted until you see a really good result from the CPI today.
03:21If we get something that's in line with forecasts or even slightly lower, then, yes, you should be able to say it's in the bag.
03:28And the Prime Minister and Treasurer were both pushed yesterday, again, on warnings of the ratings agency, S&P,
03:35that these big spending election commitments could threaten Australia's AAA credit rating.
03:40The Treasurer says he isn't concerned. Are you concerned?
03:43Look, I'm not concerned in the short term, and I think it's...
03:47You know, what the ratings agency was saying, S&P, was saying was,
03:51if this led to sustained much bigger deficits, then you would start to worry about the credit rating.
03:59They weren't saying it was under immediate threat,
04:01and they even indicated that the current level of budget deficits of around 1% is, you know,
04:07in the grand scheme of things, Australia is doing much, much better than the rest of the world,
04:12which is why we have that AAA credit rating.
04:14That said, we can't just keep promising endless spending that doesn't deliver better growth,
04:22better productivity, better outcomes over the longer term.
04:25You've got to...
04:25If you're going to spend and raise your debt in the short term,
04:28it's got to deliver those longer-term outcomes,
04:31and a lot of the promises that have been made by both sides in this election
04:35cannot be said to be, you know, meaningful contributions
