Economic Forum and Inflation Update
The Reserve Bank of Australia’s deputy governor, Andrew Hauser, is set to give a speech at an economic forum hosted by investment bank Barrenjoey. This comes less than 24 hours after the Australian Bureau of Statistics revealed that the central bank’s preferred measure of inflation, the trimmed mean, eased to an annualized 2.7 percent in the June quarter. According to Treasurer Dr. Chalmers, this outcome reflects the "remarkable progress" Australia has made in cutting inflation over the last three years.
Implications for Interest Rates
The inflation result was slightly softer than economists had expected and is widely interpreted as being consistent with the RBA board lowering the cash rate to 3.6 percent, from a current 3.85 percent, at its next board meeting in August. However, Dr. Chalmers cautioned that while the inflation outcome is positive, the global environment remains uncertain, and there are persistent structural issues in the economy, including soft growth and pressure on consumers.
Addressing Structural Issues
To address these structural issues, Dr. Chalmers has convened a roundtable of experts, business, and unions to discuss Australia’s productivity woes. The roundtable, which will gather in late August, will focus on building more homes sooner, with a priority on speeding up approvals and getting zoning for housing right. The government believes that increasing the supply of housing is crucial to addressing the cost of living crisis.
Artificial Intelligence and Job Losses
However, there are fault lines opening up between businesses and unions on the issue of artificial intelligence. The peak union body, the ACTU, has called for tougher regulations to ensure AI does not lead to job losses, while business groups have warned against regulation that could stifle the adoption of the technology. Independent MP Zali Steggall has called for the government to appoint a special envoy for AI and the future of work to drive adoption of the technology while addressing growing public distrust.
Economic Plan and Retail Sales
Ms. Steggall has launched her economic plan to re-energize the economy while speeding the transition to net zero, by encouraging clean energy investment and reducing the cost of housing. Meanwhile, retail sales figures released by the ABS will provide an update on the vitality of the Australian consumer. The recovery in household spending has been softer than the RBA had expected, but sales are expected to rebound to the highest level since the beginning of 2024.
Opposition Response
Opposition frontbencher Michaelia Cash has responded to the inflation update by saying that while it is a good thing that inflation is falling, Australians are still doing it tough because prices have grown faster and for longer compared to the rest of the world. She accused the government of being the architect of the cost of living crisis that Australians are experiencing.
Conclusion
In conclusion, the Reserve Bank of Australia’s deputy governor, Andrew Hauser, will give a speech at an economic forum, which comes at a critical time for the Australian economy. The inflation update and retail sales figures will provide important insights into the state of the economy, and the government’s efforts to address structural issues and drive economic growth will be closely watched. As the economy continues to evolve, it is essential to consider the implications of artificial intelligence, housing supply, and the cost of living crisis on the lives of Australians.
