Michele Bullock continues:

The strength of the jobs market has been surprising.

Many indicators suggest the labour market is tight, and on some measures, tightening further.

While this is good news for job seekers, the board remains alert to the possibility that it is signalling a bit more strength in the economy, that could delay or stall the disinflation process.

There’s also a lot of uncertainty around the global outlook at the moment, one of the things we’re cautious about is the possibility that policy unpredictability could lead to slower growth. Today’s decision does not imply that further rate cuts along the lines suggested by the market are coming. We removed to cautionary increase we put in 2023 to a level that’s still restrictive.

The board needs more evidence that inflation is continuing to decline before making decisions about the future path of interest rates. The board is very alert to upside risks that could derail the deflationary process. I know some other central banks have cut interest rates quite sharply over the past year, but we have taken a different strategy to most. Our policy rate was not raised as much, as many countries overseas, we judged that while inflation expectations remained anchored, we could take a bit longer to bring it down to the target band, but keep unemployment lower. We can be half with the progress made, but careful not to get ahead of ourselves.

The Business Council of Australia says the rate cut provides welcome relief for businesses battling cost pressures, but says it will do little to improve productivity.

“If we want to supercharge our economy then we need to look at how our regulatory settings are
putting the handbrake on much needed investment,” says BCA Chief Exec Bran Black said.

“Australia must become a more competitive place in which to do business if we want to be a leading economy of the future.”

The RBA Governor is speaking now (and this press conference is going to go for quite some time) where she is defending the bank’s board timing in only cutting rates now, while also saying the battle is not yet won:

Bullock:

As you know the board decided to cut the cash rate by 25 basis points to 4.1%. The cash rate has been at 4.35% since November 2023. At that time, in November 23, the upside risks to inflation had increased, so the board decided to raise the cash rate to 4.35% from 4. 1%.

To address those upside risks. Since then, inflation has fallen. And recent data suggests it’s eased a bit more than expected. Growth in private demand has also been quite weak, and wage pressures have eased. The board therefore judged it was appropriate to remove the cautionary raise under taken in 2023. I have said many times that we need to see inflation moving sustainably towards our 2-3% target band before we eased rates.

In December, we said we gained confidence that things were headed in the right direction. Now we’re at a point where underlying inflation is at 3.2%, and headline inflation is 2.4%. Inflation has eased over the past three quarters, and in the most repeat quarter, a bit more than our forecasts had anticipated. This is increased our confidence further.

It’s clear that higher interest rates have been working as anticipated, restricting economic activity, and putting downward pressure on inflation. The board judges it’s time to reduce a little bit of that restrictiveness, but we cannot declare victory on inflation just yet.

Angus Taylor is rightly pointing out that Australian living standards have fallen – but that is because household incomes have risen by less than prices. So is Taylor calling for wages and incomes to rise by more than prices? Well in theory… in practice not so much .

He also weirdly is focusing on government spending. He wants to suggest that government spending including of course 36,000 public servants in Canberra has kept inflation higher for longer. Except the RBA has just revised down its estimates for inflation even while it is increasing its estimates for public demand. The reality is that the economy is weak – GDP growth is bugger all, and household consumption is equally crap. And when you have that, government should spend and keep the economy going.

Without saying it, what Taylor is essentially asking for its for the govt to have allowed a recession to occur. That might have been great for the LNP’s election chances, not sure though it is a great economic policy.

There does seem to be a journalist in the room.

Fantastic Angus. Great work. Well done.

He seems to have one line he wants to make clear:

Q: You say that Labor predictions show they won’t restore living standards until 2030, how soon do you think the coalition government will?

We need to accelerate. That was my point. That means beating inflation sustainably.

So he doesn’t have a plan for that, but he is very sure that “Australian households had to do the work”.

Which, well – yes.

But what would a Coalition do differently?

Taylor stops short of saying something like ‘inflation will always be lower under a government I lead’ but only just. He says that:

Sustainably lower inflation and lower interest rates than they otherwise would have had, accelerating the pathway back to the standard of living they enjoyed before Labor came to power. It’s pretty basic stuff. Let’s be clear about economic management. Labor doesn’t know how to manage the economy. If you want to beat a cost of living crisis, the key is economic management. You cannot beat a cost of living crisis if you can’t manage the economy. That’s exactly what we’ve seen under Labor, seven consecutive quarters of GDP per capita going backwards, that’s not good economic management.

Sigh – Greg Jericho is working on a response because mine is just UUGKNfkljewgbdjls’acnsjl’dghls

A very, very well lit Angus Taylor is now holding his press conference. ‘Hollywood lighting’, some would call it.

We are all trying to work out if there are any journalists in the room or if the shadow treasurer is once again talking to himself.

More to come.

Asked what threat Donald Trump poses to the global economy, Jim Chalmers says:

We made it clear for some time there’s a lot of global economic uncertainty. We’ve seen that been more or less as a permanent feature of the last 15 years or so.

Now when it comes to those concerns, they’re focused on the risks of escalating trade tensions. And, you know, we’ve been monitoring those risks very closely.

We did a heap of work before the change of administration in the US, as you know, because when you look around the world, there’s the risk of escalating trade tensions, there’s still a major land war in eastern Europe, there’s the tentative ceasefire in the Middle East, there’s been pretty serious political upheaval in places like Korea, to some extent, France. And so, the global economy is a pretty uncertain and pretty dangerous place right now. We’ve made that clear in our own commentary on the situation and the Reserve Bank governor has as well in the statement she has released. These are things that we monitor very closely.

The risk is higher inflation and lower growth around the world. At a time when growth has not been especially think on the ground and inflation has been a feature of the last two or three years. We take that very seriously, as does the Reserve Bank, judging by the statement they released today.

Asked about the future of the energy bill rebate (which helped shave a few points off CPI – which was the point) Jim Chalmers said:

We treat the withdrawal of the energy bill rebates the same way the Reserve Bank does in its forecast, as a you described it, that’s a reason for – one of the drivers of the inflation forecast that the bank has released today, we’ll release our own forecast in due course.

When it comes to additional cost of living help, whether it’s energy bill rebates or others, as I said, in response to the questions from this side, we keep that under constant review.

If there’s a case for affordable responsible cost of living help, then we’ll do it. We have done that in the first three budgets, we found a way to make that consistent with cleaning up the mess that we inherited in the budget itself. If there’s other ways we can do that, in a responsible meaningful way, we’ll consider that.

Will Jim Chalmers tell people things are going to get better?

Chalmers:

First of all, rates stopped rising in November of 2023. So it’s been almost a year and a half now since rates have gone up.

We had that long period where rates are steady. I wouldn’t go near any of that sort of language. I think it’s clear from the inflation data and the decision taken today the worst of the challenge is — inflation challenge is behind us, but we’re not complacent about it.

You think about the inflation peak in 2022, 6.1% and rising by the election, 7. 8% at the end of the year, on both measures doing much better than expected by around this time. Certainly when it comes to the inflation challenge particularly, the worst of the inflation challenge is now a couple of years behind us, but we have to stay vigilant.

We can’t be complacent. You won’t hear any kind of, uh, anything other than recognition from us that people are still under pressure and this rate cut will help a little bit, but we know those pressures on household budgets are still there. That’s why our cost of living help is so important.

How does Jim Chalmers view the RBA’s uncertainty for the future?

Chalmers:

We share the Reserve Bank’s concern about the uncertain global outlook. I expressed that to you and in other forums for some time now. The world is an uncertain place and we see that reflected in the Reserve Bank’s statement today. Growth in our economy has been soft. People have been under substantial pressure and continue to be under pressure. And this decision today is partly a reflection of those two things, but it’s mostly a reflection of the very substantial and sustained progress we made together on inflation.