00:01Well, we get both the quarterly report as well as the monthly report.
00:05And in annual terms, when we look at the underlying measure, which dampens the impact of those
00:10prices that move around a lot, we are expecting the annual rate to stay at around 3.6%, which
00:17would be quite sticky, particularly when we look at the monthly series.
00:21The market is divided around whether there'll be another rate hike next month on Melbourne
00:27Cup Day.
00:28Swap markets have around a 60% chance of a rate hike attached to it.
00:32And economists are equally divided.
00:34So this report is seen as being quite critical as to whether they'll move as soon as November.
00:41So what numbers should we be looking out for today that would really firm that view that
00:46we would see a rate rise next week?
00:48I think if we see a quarterly result for the September quarter of more than 1%, I think
00:55that really livens the chance that we will see a rate hike next month.
01:01I think a result of 1% could still make it a very close call.
01:06I think a result of under 1% doesn't mean a rate hike is off the table, but certainly lessens
01:13the chance.
01:13So I think it will boil down to that quarterly result and just which side of that 1% it
01:20sits on.
01:21We also have the Fed Reserve meeting shortly. What's expected there?
01:25Yes, so markets are not looking for a move from the Fed Reserve. We will know the decision tomorrow morning,
01:31our time, very early.
01:33But certainly, inflationary pressures are also an issue in the United States, as they are in other advanced economies.
01:39And we did see that the US Federal Reserve recently resumed hiking rates.
01:44So similar to Australia, similar to European Central Bank, which also joined in.
01:50So there is still a risk that the Federal Reserve will continue raising rates.
01:56We think they will raise two more times over the next six months.
01:59But we're not expecting a move tomorrow morning, although we wouldn't fully rule it out.
02:04And the Federal Reserve, of course, doesn't set Australia's interest rates, but it does have an influence on the factors
02:08that then feed into the RBA's decisions, doesn't it?
02:11That's right. The Federal Reserve doesn't set interest rates for Australia, but what the world's largest economy, the US economy,
02:19does in terms of interest rate policy, does have an impact on the rest of the world.
02:24If the US Federal Reserve is raising rates to slow economic activity, to slow its inflation pressures, that can slow
02:31world growth.
02:32It can also impact share markets and the bond markets, which of course reverberate through to markets here in Australia,
02:40and also trading conditions in terms of exports and imports.
02:45So it is important to watch what the US Federal Reserve do.
02:49But the Reserve Bank's problem is a homegrown problem in the sense that capacity pressures are too great.
02:56Our economy is growing faster than the speed limit.
02:58But it's also due to non-homegrown factors, in particular the Middle East conflict, which has really seen a lift
03:05in crude prices and import prices that has flowed on to higher costs in Australia.
