1
00:00:00,360 --> 00:00:03,080
Speaker 1: And keeping of course with inflation. It is the big

2
00:00:03,120 --> 00:00:04,720
Speaker 1: story of the day, and how is it going to

3
00:00:04,720 --> 00:00:06,960
Speaker 1: affect the Reserve Bank, who are making a decision about

4
00:00:06,960 --> 00:00:09,080
Speaker 1: our interest rates in February. So we've got all the

5
00:00:09,080 --> 00:00:11,399
Speaker 1: four big banks cutting their mortgage interest rates over the

6
00:00:11,480 --> 00:00:14,520
Speaker 1: last few days, So there's a signal there. There is

7
00:00:14,560 --> 00:00:17,400
Speaker 1: a question as to just how low the official cash

8
00:00:17,480 --> 00:00:19,800
Speaker 1: rate will come in in light of these stats and

9
00:00:19,840 --> 00:00:22,920
Speaker 1: in light of the fears that inflation might re emerge

10
00:00:22,920 --> 00:00:25,200
Speaker 1: a bit over the course of the year. So Gareth

11
00:00:25,239 --> 00:00:28,880
Speaker 1: Kennan is Infametrics Principal forecaster and joins me. Now, hello,

12
00:00:28,960 --> 00:00:32,920
Speaker 1: Gareth Andrew. So everyone's expecting a fifty point drop in

13
00:00:32,920 --> 00:00:35,480
Speaker 1: the OCR. Where do you see the OCR going now

14
00:00:35,520 --> 00:00:37,600
Speaker 1: that the inflation figures have actually come in.

15
00:00:38,520 --> 00:00:40,560
Speaker 2: Yeah, we're still sitting with a fifty point drop in

16
00:00:40,600 --> 00:00:43,080
Speaker 2: next month's meeting at this stage. I mean, look, the

17
00:00:43,080 --> 00:00:45,120
Speaker 2: markets over the last month or so have been looking

18
00:00:45,200 --> 00:00:48,080
Speaker 2: internationally at some of the trends that have been going on,

19
00:00:48,159 --> 00:00:50,200
Speaker 2: looking at the New Zealand dollar, which is down six

20
00:00:50,240 --> 00:00:52,600
Speaker 2: percent over the last three months, and going oh, okay,

21
00:00:52,600 --> 00:00:55,200
Speaker 2: there's just some inflationary risks out there that perhaps we're

22
00:00:55,240 --> 00:00:59,000
Speaker 2: not seeing when the Reserve Bank last published their forecasts,

23
00:00:59,320 --> 00:01:01,240
Speaker 2: but taken to day's started to look their non tradable

24
00:01:01,240 --> 00:01:03,800
Speaker 2: inflation is still coming down. The risks on the trade

25
00:01:03,800 --> 00:01:05,440
Speaker 2: all side, but I don't think there's enough there to

26
00:01:05,480 --> 00:01:08,080
Speaker 2: sway the Reserve Bank towards going with a smaller twenty

27
00:01:08,120 --> 00:01:08,880
Speaker 2: five point.

28
00:01:08,640 --> 00:01:10,720
Speaker 1: Cut, okay, and I think the rest of the banks

29
00:01:10,760 --> 00:01:14,280
Speaker 1: must agree because they've preemptively started dropping their interest rates.

30
00:01:14,560 --> 00:01:16,680
Speaker 1: What do you think has sparked the drop in mortgage

31
00:01:16,720 --> 00:01:17,959
Speaker 1: interest rates in our banks?

32
00:01:18,959 --> 00:01:21,440
Speaker 2: Yeah, we've seen some of the shorter term wholesale rates

33
00:01:21,680 --> 00:01:25,520
Speaker 2: drifting down, basically following the GDP numbers late last year,

34
00:01:25,520 --> 00:01:28,640
Speaker 2: which recourse showed we're in quite a significant recession at

35
00:01:28,640 --> 00:01:31,400
Speaker 2: that point in time. We've seen over the last possibly

36
00:01:31,520 --> 00:01:33,679
Speaker 2: eight to ten days, that some of those wholesale rates

37
00:01:33,720 --> 00:01:35,760
Speaker 2: have actually been drifting a little bit back up again.

38
00:01:35,840 --> 00:01:37,679
Speaker 2: So it almost looks to me like the banks have

39
00:01:37,720 --> 00:01:39,680
Speaker 2: been away on holiday, they've come back and seen their

40
00:01:39,680 --> 00:01:43,360
Speaker 2: funding costs have come down and mostly held down, and

41
00:01:43,400 --> 00:01:46,480
Speaker 2: they've reacted to that. Financial markets have priced in a

42
00:01:46,520 --> 00:01:48,880
Speaker 2: fifty point cut next month, so there is an element

43
00:01:48,960 --> 00:01:51,480
Speaker 2: of passing that on to borrowers.

44
00:01:51,480 --> 00:01:53,760
Speaker 1: As well, and you've done some research and you found

45
00:01:53,760 --> 00:01:57,160
Speaker 1: that people who consistently fix for one year get the

46
00:01:57,160 --> 00:01:59,040
Speaker 1: best deals. Is that correct.

47
00:02:00,280 --> 00:02:02,559
Speaker 2: Over the longer term years? Certainly when you look through

48
00:02:02,840 --> 00:02:07,200
Speaker 2: following the global financial crisis right through until COVID struck us,

49
00:02:07,280 --> 00:02:10,600
Speaker 2: the one year rate was pretty consistently the cheapest one

50
00:02:10,600 --> 00:02:12,680
Speaker 2: out there if that was what you were consistently doing,

51
00:02:13,080 --> 00:02:15,840
Speaker 2: and you know, fixing for longer terms in general was

52
00:02:16,080 --> 00:02:18,160
Speaker 2: not going to be as good a bet. Of course,

53
00:02:18,200 --> 00:02:19,760
Speaker 2: we know that if you fix for five years back

54
00:02:19,800 --> 00:02:21,680
Speaker 2: in twenty twenty one, when the rates were three percent,

55
00:02:21,720 --> 00:02:23,519
Speaker 2: you'd be arguing with me. And you know that was

56
00:02:23,560 --> 00:02:26,240
Speaker 2: one of these sort of anomalies or unusual situations. But

57
00:02:26,320 --> 00:02:29,200
Speaker 2: when we're looking forward again from here, we are expecting

58
00:02:29,240 --> 00:02:31,959
Speaker 2: in general the one year rate to be the most attractive,

59
00:02:32,000 --> 00:02:33,640
Speaker 2: almost financially beneficial.

60
00:02:34,160 --> 00:02:36,680
Speaker 1: Gas Kennan Fromentals. Can I ask you a question, Can

61
00:02:36,680 --> 00:02:37,680
Speaker 1: you fit a waper blade?

62
00:02:39,240 --> 00:02:40,919
Speaker 2: I can for the wiper blade, actually did it for

63
00:02:40,960 --> 00:02:43,079
Speaker 2: the first time a couple of months ago. I'm forty eight,

64
00:02:43,320 --> 00:02:46,200
Speaker 2: finally finally manage to have the opportunity to do it good.

65
00:02:46,240 --> 00:02:47,520
Speaker 1: And can you hang a picture frame?

66
00:02:48,400 --> 00:02:49,840
Speaker 2: I can do that to you good man.

67
00:02:49,880 --> 00:02:51,840
Speaker 1: Apparently gen Z can't, so we're talking about this in

68
00:02:51,840 --> 00:02:53,359
Speaker 1: a few moments time, and I thank you so much

69
00:02:53,400 --> 00:02:54,600
Speaker 1: for your time today, Gareth.

70
00:02:55,720 --> 00:02:58,880
Speaker 2: For more from Hither duplessy Ellen Drive, listen live to

71
00:02:59,000 --> 00:03:02,000
Speaker 2: news Talks it'd be from four pm weekdays, or follow

72
00:03:02,040 --> 00:03:03,840
Speaker 2: the podcast on iHeartRadio.