Q+A: The Week Ahead | 10 Aug 2026
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Why does Stephen Koukoulas predict the RBA will keep interest rates on hold this week?
Welcome to Fear and Greed QA, where we ask and answer questions about business, investing, economics, politics, and more. I'm Michael Thompson, and every Monday morning we're joined by economist Stephen Kakulis to take a look at the week ahead. You'll find him at thekook.com, t-h-e-k-o-u-k.com, and sharing his views on LinkedIn, of course, as well. Stephen, good morning. Very good morning, Michael. There's a buzz in the air this morning, isn't there? It's a it's a big week. It's an exciting week for economists, but it's also an important one for businesses, for mortgage holders, anyone with savings in the bank. Really everyone, because the RBA board meets today and tomorrow, and they will make a call on interest rate.
So, first to the interest rate decision, and then I want to get a better understanding if If I can pick your brain while you're here of how the RBA works, how they actually make that call. But first, your prediction. Tomorrow. Rates rising, rates staying on hold.
on hold. It's a very easy I think it's an easy forecast to make this time around. You know, that well, first of all, the money markets are pricing in, you know, a very tiny chance of a of a rate hike. I think it's there just in case. But really The data flow of the last few weeks has been consistent with an on-hold decision. Now, that doesn't mean that inflation's rushing back to target or that the unemployment rate is increasing so they don't have to hike again, but the direction of a range of indicators are consistent with the with the topping out of the rate of inflation. That we know that monetary policy works with a lag.
How does the RBA Monetary Policy Board actually decide on rate changes?
The RBA knows that and they spell it out every time they give a press conference. Michelle Bullock, the governor, certainly does that. And that little bit of a downside surprise on the CPI, the inflation numbers a couple of weeks ago, uh, the fact that you know business confidence is down, consumer sentiment's down, house prices are down, even though they don't target house prices, they're part of the sort of the wealth effect, if you like. Yeah. It's a pretty straightforward decision. Yeah. On hold, We'll sound hawkish when we give our press uh conference and discussion uh that we may need to hike rates, but for the here and now, no change.
The household spending figures that we saw last week were were actually pretty strong. Uh does that complicate things at all?
Um, at the margin, I would have assumed now the RBA does not publish its forecasts or its expectations for monthly or even quarterly household spending. But yes, those numbers were quite resilient. We had uh I'll use the quarterly numbers because they're arguably the more important ones because they filter into the GDP estimates. Plus point seven percent for the June quarter. Not a bad result. So we consumers while we're feeling gloomy. Uh Uh still spending a bit. A lot of it was in discretionary spending, holidays, these sorts of things. Petrol, of course, because that's still extremely volatile as we top up our tanks for fear of the price going up or, you know, heaven forbid shortages occurring. So the numbers were actually okay, not strong.
They weren't weak.
What role does the Treasury Secretary play on the RBA board and how independent is the central bank?
And so they're probably just a smidge stronger than uh most were expecting, and that just sort of keeps the on hole decision in play.
Okay. Give me the RBA one oh one, I suppose we'll call it. Who actually makes the call on rates? Obviously Reserve Bank Governor Michelle Bullock is the face of the decision and she's the one that's out there afterwards at the press conference talking about it. But we we know that she doesn't make the call on her own, that this is a a board decision, but how is it actually made?
About five days before the start of each board meeting, so probably in the latter part of last week, the Reserve Bank staff would have prepared what they call the RBA board papers. Which is the last time I saw them, which was many moons ago to be honest, but assuming it's still a similar process, that's a big comprehensive analysis of different parts of the economy.
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Chapters
8 chapters
1
Why does Stephen Koukoulas predict the RBA will keep interest rates on hold this week?
0:05–1:42
2
How does the RBA Monetary Policy Board actually decide on rate changes?
1:42–3:13
3
What role does the Treasury Secretary play on the RBA board and how independent is the central bank?
3:13–5:35
4
What insights does the upcoming NAB Business Survey provide about business confidence and hiring?
5:35–7:43
5
How is average weekly earnings calculated and why is it a better wage indicator than the wage‑price index?
7:43–9:42
6
What trends are we seeing in average weekly earnings and will they pressure inflation?
9:42–11:03
7
What does the June‑quarter housing lending data reveal about first‑home buyers and investor financing?
11:03–12:38
8
What can we expect from Commonwealth Bank’s earnings release and its impact on mortgage stress?
12:38–14:27