HSBC Australia CEO Antony Shaw: RBA’s ‘narrow path’ is working

Antony Shaw says the RBA’s narrow path approach is helping employment rates, but it’s a slow grind to get inflation to fall sufficiently.

HSBC Australia CEO Antony Shaw. Picture: Cameron Ramsay Photography

CEO SURVEY 2025: FULL COVERAGE

Economy

How would you rate the momentum of the Australian economy as we head into 2025? Official forecasts have Australia trimming interest rates from the first half of calendar 2025, is that consistent with your view? What are you seeing around inflation in your own business?

Growth in the Australian economy has been below trend, as we continue to fight inflation. While the RBA’s narrow path approach would appear to be working and is helping to maintain full employment thus far, it is a slow grind to get inflation to fall sufficiently.

Of course, a positive feature of this approach is that the jobs market remains tight, with the unemployment rate still at low levels compared with history.

Our house view is that rate cuts are still some time away. We do not expect the RBA to cut its cash rate until the second quarter of 2025 at the earliest. Following that, we would expect a shallow easing phase to follow. We expect growth to pick-up a bit in 2025, but to remain moderate.

We also consider that there is some chance the RBA may not cut rates at all in 2025, dependent on whether inflation begins to fall within its 2-3 per cent target band.

Outlook

What excites you heading into 2025? Are you likely to increase, hold steady, or trim your investment spend?

2025 is going to be a year of global change, and with this comes opportunity.

Supporting Australian businesses to trade and invest in international markets is our core purpose and we are excited to help clients further expand their footprint in a number of key international corridors.

In the last two years the government’s focus on building relationships with growing economies has laid solid foundations for Australian businesses to continue to diversify trade relationships. The signing of a number of new Foreign Trade Agreements will also encourage Australian businesses to delve deeper into markets such as ASEAN, India, and the Middle East.

Reform

As we move into an election year, in your mind, what’s the single biggest lever that can/should be used to lift Australia’s competitiveness or productivity? This could be across any area from labour market, tax reform, training or other areas to encourage investment.

Productivity growth has been very weak in recent years and weaker than expected September quarter GDP figures does not indicate that the issue will be fixed quickly. Australia’s export success has resulted in a distinct absence of urgency to introduce meaningful reform to boost productivity, at a time when other countries have made it easier to do business and attract foreign investment.

Due to this we are now in a situation where there is no one lever that we can pull to lift Australia’s productivity. While government initiatives such as the $900m productivity fund are welcomed, it is not expected they will provide an immediate boost to productivity.

Meaningful change requires a co-ordinated response from both sides of government, the private sector, and industry across a number of different settings including competition, tax, investment, and industrial relations.

As other countries continue to make their settings more competitive, we need to make it easier and more attractive to do business in Australia.

Geopolitics

Will a Donald Trump presidency have a potential impact on your business or sector (tariffs or streamlined regulation)? Does geopolitics drive a bigger part of your decision-making?

The range of potential impacts of any action taken by President Trump is wide, but we would expect tariffs to hit global trade and GDP growth, with some of the most impacted economies in Asia.

Competing interests within Asia are potentially just as significant. Tariffs, export bans and other policy tools are being used increasingly as countries within the region pursue domestic development as a strategic priority.

Our clients are globally minded and trade extensively, so policies like tariffs or export bans can greatly influence their operations and expansion plans. Our focus remains on using our global network to support our clients to adapt to changing market conditions, as we have done as a global entity for almost 160 years.

People

Has your organisation’s approach to flexible working – including working from home – evolved during the year. Is this likely to change further into 2025?

As a global organisation, operating across multiple countries and time zones, we have an adaptive approach to hybrid work. This means different things for different teams, for example our branch staff meet customer needs through face-to-face service.

Over the last 12 months, we have seen our people embrace face-to-face connection and collaboration on a more consistent basis. This means that across the business we are seeing teams in the office three or four days a week.

Technology

Where is your organisation along the AI journey – is it in the developmental stage, or are you now using the technology at scale across your business? If so, are benefits matching the promise?

Combining great technology with great people is our model for using AI. It is about being able to leverage AI’s strengths to complement the skills and experience of our people. For example, combining AI’s processing power with expert human judgement.

On a global scale HSBC has been working with AI for many years, with our earliest machine learning models developed a decade ago. Broadly, across all our global businesses and functions, we have a few hundred use cases using some form of AI. From fraud detection and transaction monitoring, to customer service and risk assessment. Globally, AI is used to detect signs of financial crime in approximately 1.3 billion transactions a month.

In Australia, our Markets and Securities Services business uses AI Markets, a digital service that allows users to generate bespoke financial market analytics, gain access to HSBC’s real-time and historic cross-asset data sets, and browse the latest market insights.