00:00:02
Speaker 1: Welcome to the Bloomberg Australia podcast. I'm Chris Burke coming to you from Melbourne. The Iran war has sent fuel prices jumping again and Australians are responding by changing what they drive with electrified vehicles now making up more than half of new car sales. But this is about more than what's sitting in our driveways. This week, we ask Bloomberg Sydney-based economist James McIntyre what Australia's EV revolution could mean for the economy and ultimately interest rates.
00:00:32
Speaker 2: James, welcome back to the podcast. Thanks for having me, Chris.
00:00:36
Speaker 1: So Tesla, BYD, Zika, these names are becoming almost as familiar on Australian roads as Toyota and Mazda. Just how quickly have electric vehicles gone from niche to mainstream in Australia?
00:00:53
Speaker 2: Yeah, well, it's been really quite interesting. There's a few more names coming out there as well, like Jayku and a whole proliferation of Chinese brands. And what's really happened here is we've seen, especially over the course of the last six months or so, 2026 seems to have been a year where EV and battery EV vehicles in particular have really surged in Australia. We've seen this fuel price spike come into the Australian economy as a result of the Iran war since February. Energy prices, fuel prices have skyrocketed. But what we've seen is we've seen the supply of EVs from China come in. And so consumers have seen the sticker price at the petrol station, and they've also seen the sticker price at the EV dealership. And it's really resulted in this rapid, I guess, shift that's happened as demand and supply have all come together at the same time.
00:01:52
Speaker 1: Have you made the plunge, James, or are you still polluting the streets of Sydney every weekend?
00:01:58
Speaker 2: No, we're actually thinking of making the plunge. We're going to place an order soon, which is quite interesting, and going for a Chinese EV. So that's a big step, and it's a step that's going to result in a shift in the way our household operates. energy and transport expenditures are moving.
00:02:22
Speaker 1: You talked about fuel prices. If you're filling up a relic of an internal combustion engine this week, you're paying, I think, around $ 2 a litre. That's well above where prices were before the US attacks on Iran. Is that shock at the bowels of the main reason Australians are suddenly buying so many EVs?
00:02:44
Speaker 2: Well, the shock of the bowser is real. Now, we did get a couple of months there where the government's fuel excise discount helped cushion some of the blow. And that sort of gave us a little bit of a while to all adjust and get ready to what's been coming. And now we're seeing, as those excise reductions have moved away, we're seeing that petrol price continuing to remain quite elevated. Yes, you're right. It's not the only reason. We've got a major surge of supply coming out of China in terms of battery electric vehicles at a price that is vastly more competitive than many of the internal combustion engine offerings from some of the traditional or more legacy auto suppliers into the Australian market and many markets around the world. Consumers are responding to that shift.
00:03:40
Speaker 1: So I guess the big question is whether this is a lasting structural shift or just a knee-jerk reaction to the war. James, do you think we're looking at a genuine turning point for Australia's car industry here?
00:03:53
Speaker 2: Well, it does seem to be a turning point for some of the automakers who have exited the market. But the industry body does think that it is a permanent structural shift. And the reason for that structural shift is the price. We've seen the efficiency of the electric vehicle makers in terms of the power outputs from batteries getting better range. Range is now there and price is now at a point where it is incredibly competitive. And as a result, consumers are seeing that Bowser shock price from the Iran war And that's causing them to take a look at the alternative. And when they do see that alternative, they're seeing that there is a very, very high quality offering available at a very economic price point for them, not just when it comes to purchase, but when it comes to operating costs down the line.
00:04:48
Speaker 1: So you're an economist, obviously. These changes in consumption trends are always of big interest to you. And you've just done some big picture research on all this. There's something I'm really curious about. House prices are falling. We've had three interest rate hikes this year, and yet Australians are splashing out on new cars with massage seats and some with built-in karaoke machines, I believe. Where's all the money coming from?
00:05:19
Speaker 2: Well, that's right. So, one thing, and we've seen a lot of research done, central banks do it all around the world, and the RBA has done their own research on the wealth effect and how that impacts how consumers are feeling about their house prices and their overall wealth, and looking at their pocketbook and their balance sheet and deciding whether they're going to take the plunge and splurge. And the RBA's analysis, they find that in particular, You can put it down to– I'd put it down to three Cs, three sectors in particular where the wealth effect does really hit– changes in asset prices do really affect consumption. Those three Cs being cars, clothing, and couches, the furniture sector being some of the lumpier items that when people are feeling wealthier, they go and purchase. But at the moment, what we've got is we've got house prices in Australia's capital Cs have been declined significantly. declined now for a number of months. At the aggregate level, Sydney and Melbourne were first just before Christmas and early in the year, they began to decline. And on the RBA's numbers, they find that for a 1% increase in housing wealth, you get a boost to consumer spending of 0.16%. Now, if we take that in reverse, the almost 4%, nearly 5%, decline we've got in housing wealth through house price declines should result in a nearly 0.8% hit to consumer spending. But instead, we've got this with that concentration of that hit to consumer spending in those three Cs and cars in particular. And instead, what we've got is we've got vehicle sales really jumping up in the first half of the year with electric vehicles really leading the charge.
00:07:18
Speaker 1: Of course, they are saving money as well. Ultimately, in the long run, I guess, that's the way they look at these purchases. Obviously, a clear advantage of this shift is that Australian households become less exposed to volatile global oil prices. The Middle East, of course, has given us a pretty vivid reminder of that risk this year. But how significant could that kind of protection become? Could the shift to EVs materially change the way future oil shocks hit Australian households?
00:07:52
Speaker 2: Australia is a big net energy exporter to the rest of the world. And so the economy as a whole benefits when energy prices rise and the big benefits come through in terms of gas prices for the gas exports, coal prices. Now, we do export a little bit of oil, but on the flip side, the fuels that we use, the automotive fuels, we import a lot of those in particular. Around 80% to 90% of our consumption of those fuels is imported from Asian refineries. And so, while the economy benefits, consumers get this hit. Over the long term, if we look at how many litres of automotive gasoline or petrol, as we would call it in Australia... is used by Australian households. And if we divide it by the population, we find that the average person is using 3% less petrol per year going over the last decade or so. There's been this nice, gradual, steady decline interrupted during the COVID era when we had the lockdowns during the pandemic. None of us were driving around given that we were encouraged to stay in our homes. But aside from those shocks, we've seen this nice, gentle decline of 3% every year in terms of petrol use per person, except over the three months that we've got data from March and April and May, we saw instead of a 3% decline, we saw that the response of consumers in Australia to that oil price shock is around about the 20% annualised rate in terms of decline. in fuel use per person. So, it is driving a bit of a change in the regular pace or the trend that's been underway for a long time. But with this shift in the types of vehicles that people are purchasing, we might see that trend begin to accelerate given we've got an ongoing decline in the ongoing change in the types of vehicles that we're using.
00:10:03
Speaker 1: Yeah, those are some really interesting stats you've got there. If fewer of us are watching the price of the bowser every week, could that eventually change the way an oil shock feeds through to inflation and even how the RBA might respond?
00:10:19
Speaker 2: It will. It'll take a long time to get there, but it will. And we should be getting used to this over time, as the economy is always changing. And so, the way external shocks, like an oil price shock, filter into the economy will change over time. And so, let's just talk about that shift for a tiny bit. The Consumer Price Index, the headline CPI, We have the Reserve Bank of Australia targeting 2% to 3% per annum inflation on average over the course of the economic cycle. They do look at that on a trim mean basis, but the headline CPI is important, and it's really important for people's inflation expectations. So, what people think inflation is going to be can influence what they decide to go in and ask their boss for a pay rise. and push up their wages, or the wages that they will seek. If consumers know that inflation is a problem, because they're seeing it whenever they go to the grocery store, if they're seeing, let's say, when there was a big cyclone, the price of bananas skyrocketing, or if they go to the petrol station and they see the price at the bowser shooting up, they know that there's an inflationary impulse hitting the economy. That means that they're a little bit more open. to maybe businesses turning around and going, hey, you know how the petrol price is up and diesel prices are up? That delivery to us is costing a little bit more, and we need to pass those prices on to you. If consumers see that, they kind of go, oh, okay, I get it. But if we do have a different situation going forward where consumers aren't seeing that price at the pump, instead they're getting their car filled up, at the PowerPoint instead of the bowser. Maybe it's even coming from the solar on their roof. They're not seeing those prices very much, and those prices aren't moving as rapidly. They might be a little bit less willing to accommodate firms suggesting that, hey, I want to put up through a bit more pricing pressure to you. And it will change how volatile... It could change how volatile Australia's CPI is. At the moment, we've got the automotive fuel being around about 3% of the consumer price basket. That's down from 4% on the 14th series CPI. We're doing an annual reweight now. The ABS has just shifted the next one out to early next year. We should see over time less and less and less of the CPI basket being automotive fuel as people consume more and more and more electricity for their vehicles. And so that will change the volatility of the consumer price basket and also change how consumers feel about inflation.
00:13:18
Speaker 1: So how soon does this all actually start to matter for inflation? Do you think we need several more years, for example, of Australians switching to EVs before it makes a noticeable difference?
00:13:28
Speaker 2: Well, there's around about 1.2 million vehicles sold every year in Australia overall. And electric vehicles are, you know, we've seen in a couple of months electric vehicles have just become more. the majority share. They've just tipped over 50% in a couple of months. So, we are still chipping away at the edges, and we need to put this into the context of this 1 to 1.2 million cars sold a year in Australia. The passenger fleet is around about 16 million cars, and the average age is about 11 years. So, this is going to stretch out over the decade. But what we do have What might have been holding it back was the electric vehicles might have not been as attractive because they didn't have the range. They might not have been as attractive because there wasn't as much supply available before, and the prices were high. A lot of those things have changed and changed dramatically with very affordable EVs coming through, especially from China. with much, much, much improved and, in some cases, superior ranges to internal combustion engine vehicles. So we will see this moving over time as people get used to it and the supply becomes available. We will get used to more than 50% of new vehicles being sold every year, moving up to the 60%, 70%, 80% being electrified vehicles of some description, whether it's battery EV plug-in or a hybrid vehicle. And so we will see that continued acceleration, perhaps even a stronger pace of that trend decline in per-fuel use. But it's going to, you know, the average age of a vehicle in Australia is more than 11 years in the passenger fleet and 15 years for the truck fleet. So it is going to take some time still, but we should see as people, as it becomes less and less common for people to go to the petrol station, We will see that evolve over time. It's one of those, I guess, consumer psyche things that is very hard to pinpoint when it's going to be more important to talk about your energy price and the dynamic solar feed-in that you're getting for your EV at the dinner table versus talking around the barbecue versus talking about petrol prices and where they are right now.
00:15:59
Speaker 1: Yeah, so we're seeing what's ostensibly the start of this kind of permanent structural shift as you described earlier. But the economic impact will take time to flow through, as you said. But while you're here, James, what's your shorter term outlook? We've had three interest rate hikes this year. Are we finally done or is another increase still on the cards?
00:16:24
Speaker 2: Well, we think we're done. You know, our base case is that the RBA is on hold from here and we should begin to see the RBA really trying to keep a lid on expectations for inflation and keeping consumers, I guess, you know, making sure consumers keep their wallets closed. Fuel prices are going to continue to weigh on the rest of the economy over the course of the next couple of months. with those excises being removed. But the inflationary impact might not be as big, and there's a bunch of other factors that we should see easing off over time. For example, electricity prices, which had been a real challenge for the inflation story over the last 12 to 24 months, we're seeing that be quite a benign story from here on. as a result of the regulators' decisions for electricity prices this year. So, with inflation being relatively, you know, the worst of the inflation story being behind us, it's going to be sticky getting inflation back down. But we are seeing the wealth effect begin to emerge as a challenge for households and the labour market softening up as well with the unemployment rate creeping higher, but underemployment looking like a bit of a challenge too. So, all of those things are pointing in the direction of the RBA being no longer needing to put more pressure on the brakes. So, it's time to start having a discussion about when the RBA might begin to– or how long the RBA might be on hold and when they might begin to start taking some of the pressure off the brakes in the economy and moving away from a restrictive stance. And the RBA has given us a few hints on that in recent speeches, but also in their statement of monetary policy where they highlight towards the end of the forecast horizon how slack in the labour market is going to be weighing on inflation and trimmed mean inflation in particular out in the second half of 2028. So, when the RBA needs to respond to that is probably sometime early or in the middle of 2027, if that labour market softness begins to become a bigger piece of the economic story going forward.
00:18:56
Speaker 1: If you found today's conversation insightful, be sure to follow the Bloomberg Australia podcast wherever you listen. And for more on Australia's economy, including the latest analysis from James McIntyre, head over to Bloomberg.com.
00:19:09
Speaker 2: This episode was recorded.
00:19:10
Speaker 1: On the traditional lands of the Wurundjeri and Gadigal peoples, It was produced by Paul Allen and edited by Ainsley Chandler.
00:19:18
Speaker 2: I'm Chris Burke, and we'll see you next week.
Speaker 1: Welcome to the Bloomberg Australia podcast. I'm Chris Burke coming to you from Melbourne. The Iran war has sent fuel prices jumping again and Australians are responding by changing what they drive with electrified vehicles now making up more than half of new car sales. But this is about more than what's sitting in our driveways. This week, we ask Bloomberg Sydney-based economist James McIntyre what Australia's EV revolution could mean for the economy and ultimately interest rates.
00:00:32
Speaker 2: James, welcome back to the podcast. Thanks for having me, Chris.
00:00:36
Speaker 1: So Tesla, BYD, Zika, these names are becoming almost as familiar on Australian roads as Toyota and Mazda. Just how quickly have electric vehicles gone from niche to mainstream in Australia?
00:00:53
Speaker 2: Yeah, well, it's been really quite interesting. There's a few more names coming out there as well, like Jayku and a whole proliferation of Chinese brands. And what's really happened here is we've seen, especially over the course of the last six months or so, 2026 seems to have been a year where EV and battery EV vehicles in particular have really surged in Australia. We've seen this fuel price spike come into the Australian economy as a result of the Iran war since February. Energy prices, fuel prices have skyrocketed. But what we've seen is we've seen the supply of EVs from China come in. And so consumers have seen the sticker price at the petrol station, and they've also seen the sticker price at the EV dealership. And it's really resulted in this rapid, I guess, shift that's happened as demand and supply have all come together at the same time.
00:01:52
Speaker 1: Have you made the plunge, James, or are you still polluting the streets of Sydney every weekend?
00:01:58
Speaker 2: No, we're actually thinking of making the plunge. We're going to place an order soon, which is quite interesting, and going for a Chinese EV. So that's a big step, and it's a step that's going to result in a shift in the way our household operates. energy and transport expenditures are moving.
00:02:22
Speaker 1: You talked about fuel prices. If you're filling up a relic of an internal combustion engine this week, you're paying, I think, around $ 2 a litre. That's well above where prices were before the US attacks on Iran. Is that shock at the bowels of the main reason Australians are suddenly buying so many EVs?
00:02:44
Speaker 2: Well, the shock of the bowser is real. Now, we did get a couple of months there where the government's fuel excise discount helped cushion some of the blow. And that sort of gave us a little bit of a while to all adjust and get ready to what's been coming. And now we're seeing, as those excise reductions have moved away, we're seeing that petrol price continuing to remain quite elevated. Yes, you're right. It's not the only reason. We've got a major surge of supply coming out of China in terms of battery electric vehicles at a price that is vastly more competitive than many of the internal combustion engine offerings from some of the traditional or more legacy auto suppliers into the Australian market and many markets around the world. Consumers are responding to that shift.
00:03:40
Speaker 1: So I guess the big question is whether this is a lasting structural shift or just a knee-jerk reaction to the war. James, do you think we're looking at a genuine turning point for Australia's car industry here?
00:03:53
Speaker 2: Well, it does seem to be a turning point for some of the automakers who have exited the market. But the industry body does think that it is a permanent structural shift. And the reason for that structural shift is the price. We've seen the efficiency of the electric vehicle makers in terms of the power outputs from batteries getting better range. Range is now there and price is now at a point where it is incredibly competitive. And as a result, consumers are seeing that Bowser shock price from the Iran war And that's causing them to take a look at the alternative. And when they do see that alternative, they're seeing that there is a very, very high quality offering available at a very economic price point for them, not just when it comes to purchase, but when it comes to operating costs down the line.
00:04:48
Speaker 1: So you're an economist, obviously. These changes in consumption trends are always of big interest to you. And you've just done some big picture research on all this. There's something I'm really curious about. House prices are falling. We've had three interest rate hikes this year, and yet Australians are splashing out on new cars with massage seats and some with built-in karaoke machines, I believe. Where's all the money coming from?
00:05:19
Speaker 2: Well, that's right. So, one thing, and we've seen a lot of research done, central banks do it all around the world, and the RBA has done their own research on the wealth effect and how that impacts how consumers are feeling about their house prices and their overall wealth, and looking at their pocketbook and their balance sheet and deciding whether they're going to take the plunge and splurge. And the RBA's analysis, they find that in particular, You can put it down to– I'd put it down to three Cs, three sectors in particular where the wealth effect does really hit– changes in asset prices do really affect consumption. Those three Cs being cars, clothing, and couches, the furniture sector being some of the lumpier items that when people are feeling wealthier, they go and purchase. But at the moment, what we've got is we've got house prices in Australia's capital Cs have been declined significantly. declined now for a number of months. At the aggregate level, Sydney and Melbourne were first just before Christmas and early in the year, they began to decline. And on the RBA's numbers, they find that for a 1% increase in housing wealth, you get a boost to consumer spending of 0.16%. Now, if we take that in reverse, the almost 4%, nearly 5%, decline we've got in housing wealth through house price declines should result in a nearly 0.8% hit to consumer spending. But instead, we've got this with that concentration of that hit to consumer spending in those three Cs and cars in particular. And instead, what we've got is we've got vehicle sales really jumping up in the first half of the year with electric vehicles really leading the charge.
00:07:18
Speaker 1: Of course, they are saving money as well. Ultimately, in the long run, I guess, that's the way they look at these purchases. Obviously, a clear advantage of this shift is that Australian households become less exposed to volatile global oil prices. The Middle East, of course, has given us a pretty vivid reminder of that risk this year. But how significant could that kind of protection become? Could the shift to EVs materially change the way future oil shocks hit Australian households?
00:07:52
Speaker 2: Australia is a big net energy exporter to the rest of the world. And so the economy as a whole benefits when energy prices rise and the big benefits come through in terms of gas prices for the gas exports, coal prices. Now, we do export a little bit of oil, but on the flip side, the fuels that we use, the automotive fuels, we import a lot of those in particular. Around 80% to 90% of our consumption of those fuels is imported from Asian refineries. And so, while the economy benefits, consumers get this hit. Over the long term, if we look at how many litres of automotive gasoline or petrol, as we would call it in Australia... is used by Australian households. And if we divide it by the population, we find that the average person is using 3% less petrol per year going over the last decade or so. There's been this nice, gradual, steady decline interrupted during the COVID era when we had the lockdowns during the pandemic. None of us were driving around given that we were encouraged to stay in our homes. But aside from those shocks, we've seen this nice, gentle decline of 3% every year in terms of petrol use per person, except over the three months that we've got data from March and April and May, we saw instead of a 3% decline, we saw that the response of consumers in Australia to that oil price shock is around about the 20% annualised rate in terms of decline. in fuel use per person. So, it is driving a bit of a change in the regular pace or the trend that's been underway for a long time. But with this shift in the types of vehicles that people are purchasing, we might see that trend begin to accelerate given we've got an ongoing decline in the ongoing change in the types of vehicles that we're using.
00:10:03
Speaker 1: Yeah, those are some really interesting stats you've got there. If fewer of us are watching the price of the bowser every week, could that eventually change the way an oil shock feeds through to inflation and even how the RBA might respond?
00:10:19
Speaker 2: It will. It'll take a long time to get there, but it will. And we should be getting used to this over time, as the economy is always changing. And so, the way external shocks, like an oil price shock, filter into the economy will change over time. And so, let's just talk about that shift for a tiny bit. The Consumer Price Index, the headline CPI, We have the Reserve Bank of Australia targeting 2% to 3% per annum inflation on average over the course of the economic cycle. They do look at that on a trim mean basis, but the headline CPI is important, and it's really important for people's inflation expectations. So, what people think inflation is going to be can influence what they decide to go in and ask their boss for a pay rise. and push up their wages, or the wages that they will seek. If consumers know that inflation is a problem, because they're seeing it whenever they go to the grocery store, if they're seeing, let's say, when there was a big cyclone, the price of bananas skyrocketing, or if they go to the petrol station and they see the price at the bowser shooting up, they know that there's an inflationary impulse hitting the economy. That means that they're a little bit more open. to maybe businesses turning around and going, hey, you know how the petrol price is up and diesel prices are up? That delivery to us is costing a little bit more, and we need to pass those prices on to you. If consumers see that, they kind of go, oh, okay, I get it. But if we do have a different situation going forward where consumers aren't seeing that price at the pump, instead they're getting their car filled up, at the PowerPoint instead of the bowser. Maybe it's even coming from the solar on their roof. They're not seeing those prices very much, and those prices aren't moving as rapidly. They might be a little bit less willing to accommodate firms suggesting that, hey, I want to put up through a bit more pricing pressure to you. And it will change how volatile... It could change how volatile Australia's CPI is. At the moment, we've got the automotive fuel being around about 3% of the consumer price basket. That's down from 4% on the 14th series CPI. We're doing an annual reweight now. The ABS has just shifted the next one out to early next year. We should see over time less and less and less of the CPI basket being automotive fuel as people consume more and more and more electricity for their vehicles. And so that will change the volatility of the consumer price basket and also change how consumers feel about inflation.
00:13:18
Speaker 1: So how soon does this all actually start to matter for inflation? Do you think we need several more years, for example, of Australians switching to EVs before it makes a noticeable difference?
00:13:28
Speaker 2: Well, there's around about 1.2 million vehicles sold every year in Australia overall. And electric vehicles are, you know, we've seen in a couple of months electric vehicles have just become more. the majority share. They've just tipped over 50% in a couple of months. So, we are still chipping away at the edges, and we need to put this into the context of this 1 to 1.2 million cars sold a year in Australia. The passenger fleet is around about 16 million cars, and the average age is about 11 years. So, this is going to stretch out over the decade. But what we do have What might have been holding it back was the electric vehicles might have not been as attractive because they didn't have the range. They might not have been as attractive because there wasn't as much supply available before, and the prices were high. A lot of those things have changed and changed dramatically with very affordable EVs coming through, especially from China. with much, much, much improved and, in some cases, superior ranges to internal combustion engine vehicles. So we will see this moving over time as people get used to it and the supply becomes available. We will get used to more than 50% of new vehicles being sold every year, moving up to the 60%, 70%, 80% being electrified vehicles of some description, whether it's battery EV plug-in or a hybrid vehicle. And so we will see that continued acceleration, perhaps even a stronger pace of that trend decline in per-fuel use. But it's going to, you know, the average age of a vehicle in Australia is more than 11 years in the passenger fleet and 15 years for the truck fleet. So it is going to take some time still, but we should see as people, as it becomes less and less common for people to go to the petrol station, We will see that evolve over time. It's one of those, I guess, consumer psyche things that is very hard to pinpoint when it's going to be more important to talk about your energy price and the dynamic solar feed-in that you're getting for your EV at the dinner table versus talking around the barbecue versus talking about petrol prices and where they are right now.
00:15:59
Speaker 1: Yeah, so we're seeing what's ostensibly the start of this kind of permanent structural shift as you described earlier. But the economic impact will take time to flow through, as you said. But while you're here, James, what's your shorter term outlook? We've had three interest rate hikes this year. Are we finally done or is another increase still on the cards?
00:16:24
Speaker 2: Well, we think we're done. You know, our base case is that the RBA is on hold from here and we should begin to see the RBA really trying to keep a lid on expectations for inflation and keeping consumers, I guess, you know, making sure consumers keep their wallets closed. Fuel prices are going to continue to weigh on the rest of the economy over the course of the next couple of months. with those excises being removed. But the inflationary impact might not be as big, and there's a bunch of other factors that we should see easing off over time. For example, electricity prices, which had been a real challenge for the inflation story over the last 12 to 24 months, we're seeing that be quite a benign story from here on. as a result of the regulators' decisions for electricity prices this year. So, with inflation being relatively, you know, the worst of the inflation story being behind us, it's going to be sticky getting inflation back down. But we are seeing the wealth effect begin to emerge as a challenge for households and the labour market softening up as well with the unemployment rate creeping higher, but underemployment looking like a bit of a challenge too. So, all of those things are pointing in the direction of the RBA being no longer needing to put more pressure on the brakes. So, it's time to start having a discussion about when the RBA might begin to– or how long the RBA might be on hold and when they might begin to start taking some of the pressure off the brakes in the economy and moving away from a restrictive stance. And the RBA has given us a few hints on that in recent speeches, but also in their statement of monetary policy where they highlight towards the end of the forecast horizon how slack in the labour market is going to be weighing on inflation and trimmed mean inflation in particular out in the second half of 2028. So, when the RBA needs to respond to that is probably sometime early or in the middle of 2027, if that labour market softness begins to become a bigger piece of the economic story going forward.
00:18:56
Speaker 1: If you found today's conversation insightful, be sure to follow the Bloomberg Australia podcast wherever you listen. And for more on Australia's economy, including the latest analysis from James McIntyre, head over to Bloomberg.com.
00:19:09
Speaker 2: This episode was recorded.
00:19:10
Speaker 1: On the traditional lands of the Wurundjeri and Gadigal peoples, It was produced by Paul Allen and edited by Ainsley Chandler.
00:19:18
Speaker 2: I'm Chris Burke, and we'll see you next week.
