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Speaker 1: Inflation has climbed ever so slightly. It's coming at two

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Speaker 1: point seven percent, which is actually dangerously closed to the

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Speaker 1: top end of the target bank you know, set by

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Speaker 1: the rbnzet of three percent, but it's coming less than

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Speaker 1: we expected at two point eight two point nine. Mary

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Speaker 1: Joe Vigara is a senior economist at KIWI Bank. Mary Joe, Hi,

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Speaker 1: how are you well?

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Speaker 2: Thank you? Do you think this is temporary?

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Speaker 3: Yeah? I don't think there is really anything in today's

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Speaker 3: report to suggest that this kind of bout of high

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Speaker 3: inflation will be persistent. It's not like what we score

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Speaker 3: during you know, twenty twenty. There's the economic undercurrent, so

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Speaker 3: it's still very weak, and you look at domestic inflation

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Speaker 3: that's really trending down. So I don't think this is

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Speaker 3: going to be something that's persistent. It should be a spike,

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Speaker 3: which means goes up and it goes back.

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Speaker 2: Down, brilliant. So we're still going to get that OCR cut,

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Speaker 2: are we next month?

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Speaker 3: I think it does. I think it opens the door

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Speaker 3: quite quite firmly to a road cut in August. There's

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Speaker 3: just nothing in the data to suggested this inflation that

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Speaker 3: will be persist. Don't actually flow through to inflation expectations.

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Speaker 3: All of that being contained, I think the economy needs

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Speaker 3: that rate relief and this really does open the door

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Speaker 3: for a rate cut next month.

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Speaker 2: Okay, so you guys have got August locked in? What

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Speaker 2: are the rate cuts? Are you guys picking?

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Speaker 3: We still think we need the cash rate to be

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Speaker 3: firmly in that stimulatory territory, so we think the cash

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Speaker 3: rates should go down to two and a half percent.

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Speaker 3: That's what we're forecasting. Again, we've had so much easing,

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Speaker 3: but all those interest rates sensitive sectors, construction, all of

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Speaker 3: them are still quite weak, which just points to the

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Speaker 3: fact that there needs to be even more relief. So

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Speaker 3: there's been a lot of easing done. We still expected

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Speaker 3: to turn around, but to actually secure and guarantee your

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Speaker 3: recovery when you're a broad based economic recovery, we need

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Speaker 3: more stimulus from those a.

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Speaker 1: Bank And how confident are you that we are going

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Speaker 1: to have a good economic recovery underway before election next year?

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Speaker 3: It's just it's the way monetary policy works. You know,

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Speaker 3: there's a Banksy's they've eased interest rates quite a lot.

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Speaker 3: Two hundred and twenty five basis point that's been you know,

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Speaker 3: we've seen interest rates retail rates for quite a lot.

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Speaker 3: There's a wave of big wave of mortgage refixing coming

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Speaker 3: and we should see household disposable incomes increase and that

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Speaker 3: should flow through to more spending. But we just need

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Speaker 3: a little bit more to actually secure that recovery you've seen,

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Speaker 3: you know, recoiling out of a really deep recession from

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Speaker 3: last year, and just to prevent any further unnecessary, you know,

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Speaker 3: damage to the lave market, we really need to have

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Speaker 3: more steneralists come come through some there is a bank marriage.

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Speaker 2: I thank you Mary Jovigara Kiwibank senior economists.

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Speaker 3: For more from Hither Duplessy Allen Drive, listen live to

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