 Mark Bailey head of credit strategy and research at Fig is out the front of the RBA with reporter Carson Scott waiting the rates decision. Carson the big day under half an hour now to go as we've been saying you know no change expected but it's all about that statement. Yes it is all about the statement if we can read it without getting soaked to the skin. Here comes the rain not the sun. Mark Bailey though let's be honest about it since we last met the banks have done an interesting thing out of cycle rate increases so put that alongside the last rate cut several months ago you have effectively cancelled out that rate cut because at the time the banks didn't pass it on in full either so net net two actions don't pass it on in full last time raise out of cycle that's negated one cut this year correct. Absolutely and the RBAs consistently talked about that for the last several years that they will always look about the cost of capital to the end consumer whether that's business or whether that's people that are buying their houses and because the the banks have done that out of cycle interest rate it's a de facto height by the RBA so that obviously puts them more on a on a easing bias and there may be some commentary on that today. Well I mean so the last paragraph what open and willing to respond with that effect I mean what were you looking for specifically. Yeah I don't know be exactly any any change probably that last paragraph but maybe there's some commentary in terms of how banks and the cost of capital is impacting businesses and consumers in the Australian market you know it's almost kind of irrelevant what's happening on a global basis trumps come in we're not seeing any kind of inflation coming through these weak wage data out of the states with the non-farm payrolls same domestically as well. When you say it's almost irrelevant everyone knows there is no game in town quite like the feds you can't effectively purport to move ahead of them and believe that there's going to be not something you know to offset that once they move in so will you rather just not be prepared to believe December's life for the feds when that happens hopefully we'll see that US dollar trade sort of locked and loaded and not sort of showing any side of leakage. I don't think so because I think the feds hike in December's already priced in I think the key determinant of how that US dollar will trade against the Aussie is going to be the blue dot plots and how gradual they are going forward in 2017-2018. They still believe in the dot plots. Well in two years of discredited dot plots. Well you know they're back in town. Well I'll come. Why? They're the best thing we've got and yes you know people will argue that the feds credibility has been shot but again you know they they they've steered the path as they see fit in terms of the data that's come along and I think they've done a pretty good job in terms of the data I don't think it's been that strong enough to hike more than once this year. The China story we'll be just marking before the Australian dollar and trade weighted terms is pretty steady and relatively elevated it hasn't unwound and then again you've got commodity prices that have stayed up despite the naysayers saying they were sustainable. Talk to me about China 2017 is this a wheeze by Xi Jinping to stay on in power to do a swap to the cronies in the communist party and say I'll do some more infrastructure but then when he's voted back in to drop that pledge go back to fighting corruption and suddenly the Commod story looks shaky. I think the commodity story holds up I mean especially if you've got Trump as well in in the U.S. No policies on that the bond market moved on no policies whatsoever other than hot air. Absolutely agree but in terms of if you believe what he's going to come it's tightening by the way that is tightening for the U.S. economy already before the Fed. It is but in terms in terms of the commodity sector it's sucking a lot of raw materials into the States so yes China may may slow down but you know even six percent to six and a half percent he's still not a bad clip on on that Chinese economy. Seven's not the magic number in terms of keeping everyone in check and not seeing riots break up. No I don't I don't think so I think I think seven's a long time in past I think you know six to six and a half is more realistic and I think we'll get to there and if we get close to that figure I think he's still enough for Australian economy to do well. Is Renzi on their radar do they talk about Italy in the last 24 48 hours or do they skirt that go more broad brush in terms of EU influences. I think they'll probably be talking more U.S. election and probably obviously Renzi Austrian election. I don't think it'll be a big factor but the key the key factor out of the Italian referendum is the impact on the banks and the fact that they may not get the bank recapitalization done and if you start to get kind of contagion in the banking system that's when you start to see it reverberating around the world. Offset of that though of course the key effect of the Trump election pull back on banking reforms in the U.S. so size of relief there versus maybe some pain across the Atlantic. Yeah you are hopefully going to see a bit of relief in terms of regulations maybe the repeal of the Dodd-Frank you know hopefully increasing profitability but again from maybe a credit point of view are you going to see a riskier bank going forward less capital more capital towards trading more likelihood of big losses so you know it swings and roundabouts but in terms of their cost of capital and the reason why our domestic banks are hiking out of cycle is because you've seen that increase in the yield curve the underlying risk-free rate has increased and so their cost of capital has increased as well. Stay dry enjoy the statement the last one for the year have a good uh have a good decision see you soon happy new year. There we have it here comes the rain proper back to you in studio dry as ever and we'll be back at half past. Fantastic Carson thanks very much. Keep dry we'll look forward to talking to you again at half past there thanks very much Carson. Now we mentioned there the Aussie dollar is uh trading start