Stephen Koukoulas

Cutting growth in NDIS spending to 2%

per annum over the next four years is a big deal because in the forward estimates, it was around about 8%.

So that's a big cut.

And if that's symbolic of other decisions that they're going to take, and my hunch is that it will be, then you've got the government sort of playing its part now in cooling off inflation.

Obviously, that's negative for the economy too as they're withdrawing cash from the economy.

For the RBA...

If it was inflation only that they were worried about, they would hike 50 basis points, maybe 100 basis points over the next few months, because they would have to do that to get that 4% inflation rate or thereabouts down to the 2.5%.

We would need some really aggressive rate hikes.

But...

As I said, they've got a dual mandate now.

They've got to have an eye on the unemployment rate.

And if unemployment's creeping up as we get into this stagflationary period, then they might just hike once or twice more, pause,

wait for the government to pull the cash out of the economy, wait for the effects of the rate hikes that will have been delivered to have their effect, and have to be very honest with the consumer and business sector and say that, look, we're going to tolerate inflation a little bit higher for a little bit longer, but we still have at the forefront of our goal inflation two and a half.

But these are one in 50 year events that are happening right now.

Michael, on the corner of my screen here, I've got the oil price.

I used to not care too much about it.

It sort of went up and down a little bit, whatever.

But I'm looking at this thing trading like a pogo stick.

Yeah.

sometimes more up than down, actually.