Sam Watkins

Oil prices remain high.

That impact is obviously feeding through to inflation at the moment.

And we've seen a re-acceleration.

With that re-acceleration in inflation, interest rates have risen around the world and bonds have sold off.

I'd say the biggest difference is that inflation was more of a problem before Iran in Australia than what it was in many other places.

So you'll of course recall that the first increase in interest rates we saw in Australia was in February, yet the Iran war didn't start until March.

So this problem, this challenge that the Reserve Bank had and the movement in interest rates here began beforehand.

And so you would argue that move has been faster.

We've gone back into a hiking cycle, whereas other places like the US, they've paused their cutting cycle, but they have not resumed or moved into a hiking cycle.

So I think that's one of the biggest differences in Australia.

With those three successive hikes, we've now moved back to the recent peak of 4.35% for the cash rate.

So that's back where it was when we were at sort of

the most restrictive setting of the policy previously, and you're seeing an impact.

That combined, I think, with a couple of weeks ago, the budget announcements that's created another level of uncertainty across the business community and the investing community has really created a pretty complex outlook for the Australian market and some headwinds for growth.

I mentioned before government spending.

You know, that's been a real feature for Australia as well.

Government spending ex the COVID period remains at a very, very high level on a historic basis.

That has been a big impulse for driving the inflation in Australia.

It's something that Governor Bullock has alluded to a couple of times.

And the other thing is that we've seen a very, very tight labor market in Australia.