00:01It really depends on what happens with the war.
00:04If there's a quick reopening of the strait,
00:06then that situation would be averted,
00:09and you can't rule out that happening.
00:11Apparently, there's renewed talks with an offer from Iran.
00:14But, of course, if that fails,
00:16if we continue to remain in this situation
00:18where the strait is effectively blocked
00:20and oil supplies remain well down,
00:23then that would necessitate, I think,
00:25a rise in oil prices to around $150 US a barrel,
00:29which would add about $0.40 a litre at the bowser in Australia.
00:33So it's not my base case, but I'd have to say it's a high risk
00:36the longer this standoff goes on.
00:39And so that's obviously something that we all need to be aware of.
00:42In the great scheme of things,
00:43it's good to know that those reserves are there,
00:45and in some cases they're a little bit higher
00:47than when the war started.
00:49But by the same token, I think what that has done,
00:52it's alleviated this concern that we in Australia would run out,
00:55that we'd have to have fuel rationing.
00:57The Australian government has been successfully able
00:59to find extra fuel around the world.
01:03Obviously, we may pay a bit of a premium for that
01:06that other poorer countries can't do.
01:08So the issue for Australia right here, right now,
01:10doesn't seem to be an emerging or imminent shortage of fuel.
01:15It's more around ongoing increases in prices.
01:18Even if we can continue to get the fuel,
01:20if the world oil price goes up,
01:22then we will pay more for it.
01:24And so having that fuel in Australia doesn't stop the price rising
01:28and doesn't rule out that scenario of going to $150 a barrel for oil
01:32and $2.70 a litre or more at the Bowser.
01:36Quite a bit of pressure.
01:37This will be the fourth hike this year.
01:39It will take the cash rates to its highest level in almost 15 years,
01:43so you've got to go back to 2011.
01:45But each 0.25% rise in the cash rate,
01:48assuming that's passed on as a mortgage rate increase,
01:51which will almost inevitably happen, adds about $110 a month
01:55to the cost of servicing a mortgage.
01:58And this is the fourth hike this year,
02:00so it'll be $440 a month compared to what we had in January.
02:04You put that together with the rise in fuel prices since then,
02:08and for an average household with a petrol or diesel vehicle
02:12and a mortgage, then you're looking at an impost,
02:16on my rough estimates, of around $530 a month extra
02:21compared to what they were paying back in January.
02:24So obviously the pain is mounting up.
02:26It's a bit of a double whammy, so to speak.
02:27Higher fuel prices and higher mortgage costs.
02:30And that obviously at some point in time
02:32is going to act as a big dampener on consumer spending.
02:36I don't think we'll need a further rate hike after that.
02:38I know the money market has factored one in plus another one again.
02:42I think it's got about a 60% chance of a third hike
02:45at some point next year.
02:46I think that would be overkill.
02:48I think the Reserve Bank will sound hawkish
02:51following their meeting on Tuesday,
02:53so they'll give us a rate hike and it'll be a hawkish rate hike.
02:55They'll say that they might have to do more.
02:57But I think by the time we get to the November meeting,
03:00there'll be more evidence that the economy is cooling,
03:02house prices are still falling,
03:04consumers are cutting back their spending,
03:06and ultimately those things will take pressure off inflation.
03:08So I think that will enable them to hold off our beat.
03:11I can say that it is a high risk,
03:13but a second or a third hike is not my base case.
