RBNZ cuts, BoE might, RBA won’t
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What did the RBNZ rate cut signal about the end of its easing cycle?
Well, a clear picture seems to be emerging. The RBN Z cut rates yesterday, but that's probably it from them. The Bank of England might be in more of a position to cut rates after today's budget in the UK and after the higher than expected inflation number yesterday, the RBA probably won't be doing anything else. The easing cycle may well be over. Couldn't be clearer. It's Thursday, it's the twenty seventh of November, twenty twenty five. It's the morning call from NAB. Good morning. Well US stocks continue to be positive. The uh the Nasdaq up one percent, no point eight percent for the S P, but the Eurostocks fifty is up as well, one and a half percent today. Not much going on with the US dollar, but the pound is up half a percent.
The Aussie is up three quarters of one percent, sixty five point one US cents, and small moves in bond yields generally, except in the UK, where ten year guilt are down seven basis points, down eleven for thirty. We'll come to why that's happened. And oil is up a little, almost half a percent for WCI and 0.3% for Brent. And Gavin Friend is here from NAB in London. So we'll talk about uh the UK budget in a moment. Let's talk about Australian inflation first of all yesterday, because that first monthly print uh was a surprise. It was above the RBA's target, three point eight percent year on year. That's sort of just Affirms, doesn't it, that the RPA is not going to be doing very much very soon.
This of course was the inaugural. uh monthly CPI print um and which um as you say came in on the hot side. Um you know i I think um some of the caveats have been that uh this is uh the RBA has basically said until this new series beds in, you know, they're gonna be continuing to focus on the quarterly trimmed means and I think that's, you know, one reason why, you know, observers won't take Too much to heart on this. I mean, just looking at the detail, underlying inflation, you know, uh continues to push up a little bit. Um, the services categories looks okay, doesn't say acceleration from sort of the Q3 pace, and that keeps the RBA's Q four forecast uh alive. Um there's an upside surprise from Yeah.
It's discretionary items, isn't it? So th either the non discretionary items they've really cooled.
How did Australia’s surprise CPI print affect the RBA’s policy outlook?
It's the discretionary items which I mean there's no doubt that there are people struggling, but clearly there's a lot of people doing all right and they're they're spending more and that's pushing the prices up.
It is, it is. And so, you know, I think um to your point at the at the start, you know, this just keeps us alive. It's in line with our view that um w uh you know the RBA won't be doing anything we ne we th we think uh for the foreseeable future, well through into twenty twenty six and um you can see the market reaction to that today with uh with yields pushing up a little bit. So uh you know, another another Australian data release that uh that gives us a bit of a surprise, a bit of a jolt.
Hm. Yeah. Uh the RBN Z yesterday, meanwhile, cut the cash rate by twenty five basis points. But signaled really from now on, that's you know, that's it. It would take a lot for them to consider another cut.
Yeah, it did. Uh it did signal um i it's uh it's probably done easing, at least that's the sort of um you know, there's a there's a there's a a high hurdle for more easing. I think that was the sort of takeaway line. Governor Hawkesby telling the press conference that the rate track is uh is consistent with the OCR and hold through twenty twenty six. Um there's an acknowledgement too that the um activity is weak but but picking up and in that, you know, as as our colleagues at at BNZ have been pointing out, you know, we're thinking about things like the eighteenth of December Q three GDP, the RBNZ talked about North point four percent on that, uh where we think there's you know, we're slightly north of that with some upside risks, you know, and then we'll be thinking about mm and once we get into the new year, Q four CPI, where the RBN Z is thinking about two point seven percent, we have two point eight percent, you know, so as these as these indicators start to come out, I think um that'll help the market t turn this around after the jolt.
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Chapters
7 chapters
1
What did the RBNZ rate cut signal about the end of its easing cycle?
0:01–2:26
2
How did Australia’s surprise CPI print affect the RBA’s policy outlook?
2:26–5:26
3
Why is the RBA expected to hold rates steady through 2026?
5:26–8:04
4
What were the key takeaways from the UK budget and its impact on gilt yields?
8:04–10:47
5
How is the market pricing a potential Bank of England rate cut after the budget?
10:47–12:52
6
What are the latest US labour market trends and their effect on Fed rate‑cut expectations?
12:52–15:57
7
What risks did the ECB highlight in its Financial Stability Review regarding AI‑driven market moves?
15:57–17:46