Low inflation to end rate hikes?; Qantas record flight; ASIC warning on offset accounts
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What is the main topic discussed in this episode?
Welcome to Fear and Greed, business news you can use. Today, softer-than-expected inflation figures raise hopes of an end to the rate-hiking cycle. The local share market surges 1% and is now not far off its all-time high. And Qantas' new Project Sunrise plane sets a record for a non-stop flight. Plus, the corporate watchdog tells customers to check their offset accounts to make sure they're getting what banks promise. and Rio's boom earnings and dividend. It is Thursday, the 30th of July, 2026. I'm Michael Thompson. And good morning, Sean Aylmer.
Morning, Michael. Very exciting today. I mean, we have great economic news, of course.
How did the softer June inflation figures change rate hike expectations?
We have planes which suit you. But more important than anything else, earnings season has kicked off.
Makes for a very busy four weeks or so. Oh, it is an exciting time to be doing a business podcast. Let's get cracking, Sean. The main story this morning, softer than expected inflation figures for the June quarter have triggered hopes that there will be no more interest rate hikes in the current economic cycle. The headline inflation rate fell from 4% to 3.8%, while really the all-important underlying rate, which is of course the one that the RBA looks at, it was stable at 3.6%.
What do the headline and underlying CPI numbers reveal about inflation trends?
Both results were better than expected, and they were below the central bank's forecasts, had an immediate effect on financial markets yesterday. The ASX surged, the Aussie dollar fell back to 69.4 US cents, and market interest rates, otherwise known of course as bond yields, Also dropped. Yeah, just dropping that one in there for you, Sean.
In fact, bond traders now ascribe just a 3% chance of a rate hike at the August Reserve Bank meeting. That's August 11 to be specific. In quarterly terms, the underlying rate came in at 0.8%, which means it was actually slowing at the end of the 12-month period. While some economists, including Westpac's Lucy Ellis, have now wound back their forecast for a rate hike in August and certainly probably for the rest of this year, there are still plenty who don't think the economy is yet out of the woods. A couple of items of note. Price rises in market services. So we're talking about meals out, personal care, you know, the hairdresser, the barber for some of us. household services, that type of thing, that remains high and housing inflation remains high, but not quite as high as tipped.
And that augurs well for some further softening in inflation.
Yeah. All right. Let's break this down a little bit further, Sean, because housing inflation still seems to be a real problem for the federal government and for the Reserve Bank.
Which components of inflation remain elevated and why does housing matter?
Housing inflation rose to 6.8% annually, driven by electricity prices up 22.4% as rebates ended, and new dwelling prices were up 5.8% as builders continued to pass on higher costs. Food inflation was unchanged at 3.3%. The good news was a 7.3% fall in fuel prices in June. Although that relief is unlikely to last, you would expect, with fuel prices likely rising in July as the excise discount was halved. Indeed.
Certainly, there was enough in the data to suggest an interest rate hike could still happen later in the year. Around half of the items measured in the CPI basket have price rises above 3%, about 36% or thereabouts. were below 2%. So many more rising too fast in the basket. Most market economists think the Reserve Bank will stay hawkish. That means its senior management will keep talking about maybe lifting interest rates later in the year. Just sort of saying that, they call it jawboning. can actually play a role in keeping a lid on inflation. Even if they don't do anything, they just talk about doing something, and that dampens inflation expectations. Maybe there won't be another rate rise. Instead, though, rates might have to stay higher for longer to control inflation.
Bottom line in all this, Michael.
Yeah, that's what I'm here for.
Yeah, of course. Inflation is not low. Let's not kid ourselves. It is still well above the Reserve Bank's 2% to 3% target band. Some of the heat is coming out of inflation, but only a little bit.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:06–0:44
2
How did the softer June inflation figures change rate hike expectations?
0:44–1:23
3
What do the headline and underlying CPI numbers reveal about inflation trends?
1:23–2:50
4
Which components of inflation remain elevated and why does housing matter?
2:50–4:48
5
How did markets react to the inflation news and what does it mean for the ASX?
4:48–7:52
6
What did ASIC find about offset accounts and who might be affected?
7:52–10:22
7
Why did Rio Tinto report a bumper result and which commodities drove profits?
10:22–15:23
8
What record did Qantas’ Project Sunrise A350 attempt and what were the flight details?
15:23–17:16
Speakers
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