The race to stop inflation
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What’s the overall outlook for inflation and why is the “final furlong” metaphor used?
Well, in racing parlance, perhaps a day late, uh, we thought we were on the final furlong when it comes to the race to stop inflation. Yeah, uh but central banks aren't too short. That's why rain cut expectations are being pushed back. We'll look at the revised forecasts and comments from the RBA yesterday, plus what other central bank reps have been saying and labor market data from New Zealand today, and the final read on European, UK and US PMIs today as well. Well it's Wednesday the fifth of November twenty twenty five. It's the morning call from Nab. Good morning. Well, the US dollar has climbed naught point three percent on the DXY, reaching above one hundred point two today, which I think is the highest since May.
I think I've got that right. The Aussie dollar is down naught point six percent, trading below sixty five US cents. The pound, actually one of the biggest moves, it's down naught point eight percent today. Uh and equity is not a good day at all for US equities. The NASDAQ is down one and a half percent. The S P five hundred is off naught point nine percent. Bond yields are falling, ten year treasury is down three.
How did the RBA’s latest statement change expectations for rate cuts?
Basis points. Most of Europe is down just one basis point. Aussie 10 years were at 4.34% yesterday, a couple of basis points lower than that this morning. And on commodities, oil is a bit lower, half a percent off Brent and WTI, with Brent around 84.50 a barrel. Spot gold dropped as well, down one percent today. And here's NABS Rayatral. So we'll talk about equities, but let's talk about the RBA first of all. Perhaps not as Exciting as the Melbourne Cup yesterday, but uh because it was all on hold, a unanimous decision. I don't think that surprised anyone. And we you know, for the reason that we saw that pick up in inflation. But we had forecasts as well, of course. So any surprises in that?
rises, obviously, you know, and in the um press conference there is a more I wouldn't quite describe as a neutral tone, but it's pretty clear I think with um you know inflation, you know, to the extent that there is certainly noise in the Q three uh CPI numbers, which uh um Governor Bullock admitted to um and you look at the revised uh inflation forecasts that have actually got um Trim mean CPI now above three percent through the middle of twenty twenty six, effectively above target for the next sort of nine months or so. No surprise that the sort of message as far as as policy is concerned, that it's sort of very much in wait and see mode here, although again, Bullock did talk about we might cut rates or we might not.
So arguably you'd still say that for choice, which is also NAB's view that if rates are Going anywhere um in the next sort of nine months or so, uh more likely to be down than up. But at the same time, you know, she was very clear to say that um you know that that's not necessarily a given as such. So um you know, and I think some of the sort of takeaways, certainly in the statement itself, there was a a question regarding the or a a a statement or a sentence regarding uncertainties regarding the assessment that monetary policy remains Yeah that means that's a good idea. Yeah, that
makes it sound like there's gonna be no more cuts, doesn't it?
Well, it says we're uncertain as to whether or not it's restrictive. So it just wind back a couple of weeks and you know th th the the commentary from the RBA was that they still thought that policy was a little restrictive, which sort of justified you know an easing bias if that's what you want to say, or certainly no strong pushback um by the RBA from market pricing that obviously still had at least one more rate cut in it. So you know, that additional you know
What are the key take‑aways from the Fed’s Lisa Cook comments on inflation risks?
of rate cut I use the term singular um as far as the cycle is concerned, is is certainly uh you know certainly under considerable doubt and you know whether or not inflation you know is going to trend back down to within target as per the new forecast is obviously going to be very key to that. But it also suggests that you know the RBA can't really have any sort of significant tolerance for you know GDP growth above trend, which
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Chapters
8 chapters
1
What’s the overall outlook for inflation and why is the “final furlong” metaphor used?
0:01–0:58
2
How did the RBA’s latest statement change expectations for rate cuts?
0:58–3:22
3
What are the key take‑aways from the Fed’s Lisa Cook comments on inflation risks?
3:22–6:17
4
Why are US equities and the “Magnificent Seven” under pressure today?
6:17–8:45
5
What is the Bank of Canada’s stance on holding rates versus cutting them?
8:45–11:16
6
How might the UK’s fiscal plans and the Bank of England’s policy react?
11:16–13:35
7
What do the latest PMI readings across Europe, the US and China indicate for growth?
13:35–15:30
8
What does the New Zealand labour market data suggest about future economic momentum?
15:30–16:39