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Speaker 1: So Australia came to the punter's party yesterday with their

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Speaker 1: first interest rate cut and over four years today it's

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Speaker 1: our turn. We've been in the business of course for ages,

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Speaker 1: given we overheated the place, and it's another fifty today.

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Speaker 1: But then what next is the interesting scenario. BNZ chief

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Speaker 1: economist Mike Jones with us Mike Morning, Mite. Is there

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Speaker 1: any anyone out there who doesn't say fifty?

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Speaker 2: Not as far as I'm aware. It's just about as

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Speaker 2: consensus a view as are ever going to get. I mean,

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Speaker 2: all of the people like me are calling it. And

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Speaker 2: markets are baked in a fifty with just about one

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Speaker 2: hundred percent precision. So it looks looks unindusted from.

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Speaker 1: Us and some of these numbers we've seen in the

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Speaker 1: last week or so, the inflation figures might be a

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Speaker 1: bit of life there, the manufacturing services sector turning around.

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Speaker 1: Do they take into account any of that or not?

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Speaker 2: Yeah, I mean there's been some unders and overs I

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Speaker 2: think when you put it all together, though, things are

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Speaker 2: tracking pretty well as the Reserve Bank expected when they

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Speaker 2: last met back in November. And let's not forget when

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Speaker 2: they met in November they basically said they're going to

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Speaker 2: cut fifty points today unless something sort of wildly threw

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Speaker 2: them off off track, and I don't think that has happened,

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Speaker 2: so it looks likely that will get that big cut today.

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Speaker 1: And how much consensus have we got round post fifty.

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Speaker 1: Is it twenty five and twenty five and we're done

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Speaker 1: or not?

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Speaker 2: I know. I think from here it gets trickier. I

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Speaker 2: think the reducy bit in the statement today is going

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Speaker 2: to be what the bank say is about the path

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Speaker 2: for interest rates from here, So it's going to be

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Speaker 2: this mad scramble as we all go to the back

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Speaker 2: of the document and have a look at the forecast.

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Speaker 2: I think there is an expectation that things will slow

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Speaker 2: down to that more regulation twenty five basis point cut

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Speaker 2: permitting type of run rate. But I think really the

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Speaker 2: interest is in just how low it goes. Our expectation

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Speaker 2: is the sort of neutral around three percent or maybe

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Speaker 2: a little bit below that. But there's different opinions there.

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Speaker 1: How much of the psychology is at play at this

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Speaker 1: particular point. And I cite those numbers, and I cite

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Speaker 1: this ongoing commentary that apparently by the end of the

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Speaker 1: year things are going to be growing again. Need people

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Speaker 1: to think and believe that and act on it, don't

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Speaker 1: we And who can guess whether that's going to happen.

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Speaker 2: I think that's right, and I think if you look

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Speaker 2: at the numbers that are coming through, there has been

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Speaker 2: this big divergence between confidence and in confidence. Business confidence

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Speaker 2: and confidence has been riding high on the expectation their

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Speaker 2: interest rates keep climbing, but we haven't really seen that

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Speaker 2: much evidence so far and the hard numbers that the

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Speaker 2: economy is turning around. Now we are starting just just

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Speaker 2: this week and last to see a little bit more

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Speaker 2: that in that regard, which I think is encouraging. But

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Speaker 2: you know that the recovery is by no means assured,

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Speaker 2: And I think the point is that recovery is built

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Speaker 2: on the expectation that rates keep coming down from here.

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Speaker 2: So today's fifty, you know, won't be the last. I

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Speaker 2: think we see the need to keep cutting the official

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Speaker 2: construp from here to get stimulus back into the economy.

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Speaker 1: Rad stuff, Mike, appreciate it, Mike Joones, who's with the

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Speaker 1: B and Z chief economists for them.

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