Q+A: The Week Ahead | 15 June 2026
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What are the expectations for the RBA's interest rate decision this week?
Welcome to Fear and Greed Q&A, 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 Koukoulis to look at the week ahead. You'll find him at thekouk.com and sharing his views on LinkedIn as well. Stephen, good morning. Very good morning, Michael. This is a big week, isn't it? It's an exciting week whenever the Reserve Bank Board is meeting. They're, of course, sitting down today and tomorrow and tomorrow afternoon, they'll share the decision on interest rates, but more importantly, we'll hear some of the reasoning and the thinking behind where the RBA is at at the moment. What are you expecting to see?
Like, I think, just about everybody, no change in rates for a couple of reasons, or for many reasons, I should say. There are three rate hikes in the tank from the first half of the year, and they're still working their way through the economy. And the RBA know that, and so do we need to sort of put even more restrictions on? So we can take a timeout, or they can take a timeout. A lot of the economic news has been erring on the side of slightly softer or a good deal softer. So you've got the unemployment rate numbers, which came out after the last rate hike, up to 4.5%, a four and a half year high. GDP, not bad, but 0.3% for the quarter was not strong either. you've still got the global ructions going on and about, and they're changing hour by hour, day by day.
So it's a moving feast. But suffice to say, it's not generally good news about the global economy.
How have recent economic indicators influenced the outlook on interest rates?
The European Central Bank hiked rates last week. Many other central banks are expected to do so in the months ahead. So that's another input to their consideration. So Summing it all up, even though inflation is still above the target and above by a fair amount, by a large amount, they reckon for this time we can afford a timeout. We can see the lagged effect of these rate hikes that we've already delivered on the inflation rate. And in the meantime, the slowing in the economy is the prerequisite for future inflation to fall. And we're seeing that. So the things, the cogs are working in the right direction so they can afford to sit tight.
Okay. In the last week, we have seen some commentary around the Reserve Bank and around interest rates, and it feels like things are changing. For instance, NAB, Commonwealth Bank, I think HSBC as well, all talking about the fact that the next move in rates will not be another hike, that it will be a drop. at some point in the future, maybe not for another year. Does that line up with what you're thinking now that it will be kind of 12 months time we'll be looking at a dip, but nothing else before that?
Yeah, look, I think that's right. I think that there's enough evidence in that summary that I just gave you to say that, You know, if they're not going to hike, well, that means the next move is down probably. But yes, well into the future. You know, the RBA, before they pull that trigger on a rate cut, if that is in fact the scenario, which I do agree wholeheartedly with. for them to actually pull the trigger on a cut, they need to see that inflation rate rapidly returning to the midpoint of their target band, so 2.5% for annual inflation.
What factors could lead to a potential rate cut in the future?
We're not there yet. And probably to sort of reinforce that rate cut if and when it comes, they need the unemployment rate to be materially higher than the 4.5%. So up towards, certainly 5% would do it, but even the high 4s, you know, 4.7, 4.8, 4.9, if the inflation rate is coming down rapidly, yeah, that's the scenario for a rate cut. And just as another small aside to this whole debate, house prices... even though the Reserve Bank does not, and I put capital N-O-T, target house prices, they do take account of their effect on... bank balance sheets yeah falling house prices if it's a large fall is sort of poisonous for the banks and they look at it from the side effect from household wealth if house prices are going up we feel wealthier as consumers we tend to spend more if house prices are going down and you just borrowed a great big chunk of money and oh my house has now gone down in value you will uh
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Chapters
6 chapters
1
What are the expectations for the RBA's interest rate decision this week?
0:05–1:47
2
How have recent economic indicators influenced the outlook on interest rates?
1:47–3:32
3
What factors could lead to a potential rate cut in the future?
3:32–5:39
4
Why are consumers feeling pessimistic despite a strong stock market?
5:39–7:39
5
How do recent IPOs impact consumer sentiment and economic outlook?
7:39–9:22
6
What role does housing market performance play in the economic landscape?
9:22–10:51
Speakers
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