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Speaker 1: Liam dan Nzid Herald's Business editor at large with US Now. Liam,

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Speaker 1: good evening.

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Speaker 2: Gooday, Ryan.

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Speaker 1: So all this tariff talk, we're going to talk. We're

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Speaker 1: going to keep it simple for people tonight and I

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Speaker 1: need that more than anyone. So what does it mean

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Speaker 1: for our mortgage rates?

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Speaker 2: Well? Great question. So look, the tariffs, you know, those

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Speaker 2: direct tariffs. You've heard people talking about the direct tariffs.

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Speaker 2: We can probably manage them. But the trouble is what

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Speaker 2: happens to the US economy affects US. So if they

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Speaker 2: are inflationary for the US economy, and that does look

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Speaker 2: you know, that's what the markets are expecting, and you

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Speaker 2: see the US Federal Reserve is unable to cut rates.

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Speaker 2: They may even worry about inflation and talk about putting

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Speaker 2: rates up. That puts up the international cost of borrowing,

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Speaker 2: so that the US yields really set the market. So

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Speaker 2: were that would put up with pressure on borrowing costs

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Speaker 2: for our banks, and so you know, you could, I

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Speaker 2: mean the Reserve Bank could counter that by cutting the

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Speaker 2: OCR a bit lower. But ultimately that you know that

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Speaker 2: the trouble is the US economy is so influential on

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Speaker 2: everything else that happens in financial markets. So even if

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Speaker 2: New Zealand, New Zealand's got a lot of work to

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Speaker 2: do to negotiate this anyway, and we've got our own

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Speaker 2: risks around, you know, a slowdown because our trading partners

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Speaker 2: a hit harder and all the rest of it. But

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Speaker 2: you know, what happens in the US economy will matter too.

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Speaker 1: Right, Let's talk the dollar. What happens with the dollar, Well.

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Speaker 2: It's been bouncing around all over the place. Today, it

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Speaker 2: went down and up and down and up and ended up.

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Speaker 2: It's fifty seven something now, so it's actually kind of up.

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Speaker 2: So the issue is, on the one hand, you've got

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Speaker 2: inflationary risk in the US. On the other hand, you've

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Speaker 2: got people talking about a recession. So you know which

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Speaker 2: which one's going to sort of which way is it

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Speaker 2: going to break or are they going to be stuck

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Speaker 2: with stagflation, which is recession and higher inflation should be

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Speaker 2: terrible for everyone too. So look, it's not one hundred

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Speaker 2: percent clear, cup, but if the inflation, if it's inflationary

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Speaker 2: in the States, you'd expect that to keep interest rates

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Speaker 2: up to keep the US dollar up, and our dollar

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Speaker 2: would stay low, which actually, you know, it does help

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Speaker 2: offset things for the our exporters, you know, the low

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Speaker 2: dollars really helping bring dollars in the New Zealand dollar

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Speaker 2: terms and keeping us competitive. It's not so good on

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Speaker 2: the import side, so that could import a bit of

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Speaker 2: inflation if our dollar stays low. So we you know,

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Speaker 2: could be facing a bit of inflation pressure here as well,

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Speaker 2: which again would squeeze the Reserve Bank because it's looking

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Speaker 2: at you know, that trade off between keeping inflation under

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Speaker 2: control and stopping the economy slowing down too.

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Speaker 1: Much, and Key we Saver run us through it.

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Speaker 2: Well, it's already yeah, Kee We Saver is already looking rough, right,

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Speaker 2: So you know, we are hugely influenced by Wall Street.

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Speaker 2: Our funds have a large exposure. I know, I've talked

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Speaker 2: to some fund managers who are you know, there is

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Speaker 2: talk about shifting out towards Europe and looking back at

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Speaker 2: other parts of the world, but really where Wall Street goes,

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Speaker 2: everyone sort of follows, and so it's been it's been off,

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Speaker 2: it's going to be you know, the futures are saying,

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Speaker 2: you're looking at it two to three percent off again tonight.

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Speaker 2: So yeah, not going to be a great day to

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Speaker 2: look at your KEII saver tomorrow or in the next

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Speaker 2: next couple of weeks. I guess it's just we don't know.

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Speaker 2: It is a giant experiment. What happens from here, you know,

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Speaker 2: how much of its negotiation, how those negotiations go, whether

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Speaker 2: it escalates to a bigger trade war. So, yeah, there

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Speaker 2: was a it's a rough one. Markets have to, you know,

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Speaker 2: process that this was a more aggressive starting point than

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Speaker 2: maybe they had expected. They've been in pricing some some

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Speaker 2: of this sin but they'll have to absorb that and then,

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Speaker 2: you know, we hope that doesn't doesn't escalate from here,

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Speaker 2: that if anything, it could be dialed back, but that

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Speaker 2: remains to be seen.

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Speaker 1: Unfortunately, we're holding up breath and hoping that they it

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Speaker 1: doesn't escalate any further. Detonal, Liam, thank you very much

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Speaker 1: for that. Liam dwan Insidherald Business editor at Large on

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Speaker 1: Trump's tariffs announced today. For more from Hither Duplessy Allen Drive,

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Speaker 1: listen live to news talks. It'd be from four pm weekdays,

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