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Speaker 1: Wow, fascinating you forecast for our economy infometrics thinks the

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Speaker 1: Reserve Bank's going to cut next month. Well, hopefully done,

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Speaker 1: we all, but that impact won't flow through until mid

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Speaker 1: next year. Right by that time, they argue your expert

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Speaker 1: returns an earlier rate carts, they'll have kicked in, growth

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Speaker 1: will have fired up, and all of a sudden we

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Speaker 1: face the prospect of a bit of overheating. So Gareth

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Speaker 1: Kennan's the infometrics to forecaster, of course, and it's back

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Speaker 1: with this is Gareth. Morning.

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Speaker 2: Morning, Mike.

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Speaker 1: Haven't talked to you for ages. You're feeling good?

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Speaker 2: Well, I've been taking them happy pills, haven't I It's

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Speaker 2: been a little while since we've talked about upside risks to.

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Speaker 1: Them bring on some overheating. I'm looking well to the

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Speaker 1: winds that arrived.

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Speaker 2: Well, yeah, probably the sort of middle to the latter

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Speaker 2: part of next year. We think the growth will be

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Speaker 2: pushing out towards over two percent. I mean, that's not

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Speaker 2: rapid growth, but we're still looking at a picture where

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Speaker 2: population growth is relatively weak, and as you say, over

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Speaker 2: the last couple of years we've had nothing going backwards.

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Speaker 2: So it is looking like better times coming through, but

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Speaker 2: the warriors you get through to twenty twenty seven and

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Speaker 2: then Reserve Bank probably need to start hiking rates up again.

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Speaker 1: Now we're talking next week, we get to read on

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Speaker 1: the inflation, which may well breach three. Is that part

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Speaker 1: of this or do we look through that but for

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Speaker 1: now and still wait for some real growth to come

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Speaker 1: through in twenty six.

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Speaker 2: Yeah. I don't see a lot of concern around that

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Speaker 2: sort of inflation number next week, although you're right it's

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Speaker 2: close to the top of the target band for the bank.

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Speaker 2: When you look past the sort of electricity, the insurance,

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Speaker 2: the rates, right through most of the rest of the CPI,

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Speaker 2: there's not a lot of price pressures there. It reflects

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Speaker 2: the weak demand across the economy. So quite different to

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Speaker 2: what we were seeing three or four years ago.

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Speaker 1: How confident in this forecast are you?

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Speaker 2: There's still a lot of uncertainty out there, let's be honest,

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Speaker 2: and that does factor through into the Reserve banks thinking

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Speaker 2: and their decision making. At the moment. You know, you've

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Speaker 2: still got the international situation rumbling on with tariffs and

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Speaker 2: you know what Trump is doing in that space. You've

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Speaker 2: had a little bit of weakness coming through, not a lot,

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Speaker 2: but just a little bit of cautionary signs in terms

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Speaker 2: of dairy prices and horticulture prices recently as well. And

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Speaker 2: you know, anyone who listens to economists over the last

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Speaker 2: eighteen months or have been told several times that the

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Speaker 2: economy is going to be improving and they get to

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Speaker 2: see it, of course.

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Speaker 1: Yeah, exactly. Cash rate, you say, back to three, So,

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Speaker 1: remembering it's low tows cash right back to three by

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Speaker 1: the end of twenty seven. So what you're arguing is

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Speaker 1: we're down and then we're going to fire up, and

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Speaker 1: by firing up, we're back up to three. So it's down,

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Speaker 1: then it's up.

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Speaker 2: That's right. Then, let's be honest, three percent doesn't really

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Speaker 2: concern us. That's kind of getting back to neutral. The

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Speaker 2: risk for us, and this is not our central forecast,

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Speaker 2: but the risk that we're increasingly starting to become concerned

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Speaker 2: about is that rather than going to three percent by

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Speaker 2: the end of twenty twenty seven, you're back up to

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Speaker 2: four percent and then you've got mortgage rates up over

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Speaker 2: six percent.

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Speaker 1: Yeah. Interesting, all right, mate, go well, appreciate it. Gareth

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Speaker 1: Kernan out of Infometrics.

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