In this podcast Warren Hogan, Managing Director of EQ Economics and Economic Advisor at Judo Bank, provides an in-depth analysis of Australia’s economic landscape and the rationale behind his views on interest rates and inflation.
Warren emphasizes the need for Australia’s cash rate to surpass 4% in order to achieve a zero real interest rate. He argues that negative real interest rates historically do not help control inflation and can even contribute to its rise. By maintaining a zero real interest rate, Hogan believes the country can achieve a soft landing and effectively manage inflation.
Despite concerns about a potential economic downturn, the Australian economy has shown resilience Warren says and he also mentions interactions with mid-sized companies and their positive outlook, indicating that business activity remains strong. Adding recent employment data and member feedback showing that businesses are still hiring due to labor shortages.
Warrens shared his view that the cash rate could reach 4.35% or possibly 4.6% by the end of September. However, suggesting that once this target is achieved, there should be a genuine pause of four to six months to observe the effects of previous rate hikes. This pause period would allow the economy to stabilize and inform future monetary policy decisions.
This podcast is highly recommend listening, giving a comprehensive providing valuable perspectives and insights into Australia’s economic outlook and the role of interest rates and other economic levers in managing inflation.