1
00:00:00,160 --> 00:00:04,320
Speaker 1: Caitlyn Paker Molfedesset Management with me. Now, hey, Caitlin, Hi,

2
00:00:04,400 --> 00:00:06,400
Speaker 1: here are you. I'm very well, thank you. Now, there

3
00:00:06,440 --> 00:00:08,520
Speaker 1: was a little bit of flirtation from the market, wasn't

4
00:00:08,520 --> 00:00:11,160
Speaker 1: there as to the possibility of a seventy five basis

5
00:00:11,160 --> 00:00:12,920
Speaker 1: point cut? So when we got the fifty were they

6
00:00:12,920 --> 00:00:13,760
Speaker 1: disappointed today?

7
00:00:15,000 --> 00:00:17,319
Speaker 2: Yeah, Look, it was very much consensus that we have

8
00:00:17,520 --> 00:00:20,360
Speaker 2: half percent, but they were toying with the idea that

9
00:00:20,400 --> 00:00:22,560
Speaker 2: we might get a bit of a chunkier point seven

10
00:00:22,760 --> 00:00:25,880
Speaker 2: five percent cut away before Christmas. But look, there wasn't

11
00:00:25,880 --> 00:00:28,320
Speaker 2: really much disappointment. I suppose what we did see was

12
00:00:28,320 --> 00:00:31,200
Speaker 2: a bit of volatility versus drastic end to day changes.

13
00:00:31,240 --> 00:00:34,080
Speaker 2: And there's a bit of time between when the Reserve

14
00:00:34,120 --> 00:00:37,040
Speaker 2: Bank released their statement to their forecast before we have

15
00:00:37,200 --> 00:00:41,239
Speaker 2: the PRESO, so the communication was a bit mixed initially.

16
00:00:41,320 --> 00:00:43,440
Speaker 2: And initially we actually saw a currency rally in the

17
00:00:43,520 --> 00:00:45,600
Speaker 2: view that the official cash right wasn't going to be

18
00:00:46,000 --> 00:00:49,320
Speaker 2: moving as low as initially taught looking at the forecast.

19
00:00:49,360 --> 00:00:51,440
Speaker 2: But then on the press conference with Governor Or he

20
00:00:51,520 --> 00:00:54,560
Speaker 2: gave very clear guidance that another half a percent cut

21
00:00:54,600 --> 00:00:57,240
Speaker 2: is very much their base case for February so we

22
00:00:57,280 --> 00:00:59,760
Speaker 2: saw a lot of this unwined as well. And then

23
00:01:00,000 --> 00:01:04,480
Speaker 2: in terms of interest rates, there was no massive move

24
00:01:04,560 --> 00:01:07,680
Speaker 2: in terms of official cash right track. They still see

25
00:01:07,680 --> 00:01:10,160
Speaker 2: the low at about three percent, but they did note

26
00:01:10,480 --> 00:01:13,400
Speaker 2: that there is a higher risk of inflation volatility towards

27
00:01:13,400 --> 00:01:15,640
Speaker 2: the end of next year. So we saw interest rates

28
00:01:15,680 --> 00:01:17,319
Speaker 2: move up. You know, the two year was up aboutero

29
00:01:17,319 --> 00:01:18,840
Speaker 2: point one percent at the end of the day, but

30
00:01:19,400 --> 00:01:21,959
Speaker 2: nothing drastic to call out, and nothing major to call

31
00:01:22,000 --> 00:01:23,840
Speaker 2: out either on the equity side. After today, it was

32
00:01:24,000 --> 00:01:25,080
Speaker 2: very much as expected.

33
00:01:25,400 --> 00:01:27,800
Speaker 1: And let's seventy five basis point that that idea that

34
00:01:27,920 --> 00:01:30,039
Speaker 1: was basically there because the reserve banks having this mess

35
00:01:30,040 --> 00:01:31,400
Speaker 1: of three month break right.

36
00:01:31,959 --> 00:01:34,760
Speaker 2: Yeah, they're definitely they're heading on their three month hiatus

37
00:01:35,400 --> 00:01:37,640
Speaker 2: as they do every year. So some of the thinking

38
00:01:37,680 --> 00:01:39,600
Speaker 2: behind it was, you know, why not get ahead of it.

39
00:01:39,640 --> 00:01:41,760
Speaker 2: A lot can happen in three months, and we are

40
00:01:41,840 --> 00:01:44,120
Speaker 2: seeing a bit of green shoots in the data out there,

41
00:01:44,160 --> 00:01:46,480
Speaker 2: but it's still very very soggy, and a lot can

42
00:01:46,520 --> 00:01:49,600
Speaker 2: happen in three months. Also offshore, we have an inauguration

43
00:01:49,720 --> 00:01:52,440
Speaker 2: in the US, but you know, regardless if they did

44
00:01:52,440 --> 00:01:55,120
Speaker 2: the point seventy five today instead of the half a percent,

45
00:01:55,440 --> 00:01:57,600
Speaker 2: we still have an official cash right that starts with

46
00:01:57,640 --> 00:02:00,320
Speaker 2: the four, so that's still considered to be very strict

47
00:02:00,400 --> 00:02:03,040
Speaker 2: of and the Reserve Bank they're not expecting to get

48
00:02:03,080 --> 00:02:05,960
Speaker 2: back to their the bounds of what they consider neutral,

49
00:02:06,040 --> 00:02:09,720
Speaker 2: so not you know, stimulating growth, but not neither restricting growth.

50
00:02:09,720 --> 00:02:12,560
Speaker 2: They're causing inflation until the end of twenty twenty five.

51
00:02:13,320 --> 00:02:15,520
Speaker 1: And okay, so we've gone from five and a half

52
00:02:15,560 --> 00:02:18,120
Speaker 1: to four point twenty five. The average mortgage rate that

53
00:02:18,200 --> 00:02:20,040
Speaker 1: kiwis are paying is still close to six and a

54
00:02:20,080 --> 00:02:22,680
Speaker 1: half why Yeah, so that.

55
00:02:22,720 --> 00:02:26,280
Speaker 2: Was highlighted today by Governor or So the effective interest

56
00:02:26,360 --> 00:02:28,440
Speaker 2: rate that's six and a half percent that kiwis are

57
00:02:28,440 --> 00:02:31,200
Speaker 2: paying right now, that's expected to drop to about five

58
00:02:31,240 --> 00:02:33,919
Speaker 2: point eight percent by their calculations over the next year,

59
00:02:33,960 --> 00:02:36,440
Speaker 2: which is still pretty high. And you know why is this?

60
00:02:36,480 --> 00:02:39,680
Speaker 2: It really comes down to the margin pressures that banks

61
00:02:39,720 --> 00:02:42,600
Speaker 2: are having on their funding costs. So they were benefiting

62
00:02:42,639 --> 00:02:45,880
Speaker 2: from that lower funding from the Funding for Lending program,

63
00:02:45,880 --> 00:02:48,359
Speaker 2: you know, cheap funding that the worbiens out we're able

64
00:02:48,360 --> 00:02:50,680
Speaker 2: to provide. That's now off the table, so the banks

65
00:02:50,680 --> 00:02:53,040
Speaker 2: are having to pay up for more expensive deposits, so

66
00:02:53,520 --> 00:02:56,720
Speaker 2: they're not rushing to cut their margins and Governor Or

67
00:02:56,840 --> 00:02:59,400
Speaker 2: he did note that he does expect on the flip

68
00:02:59,440 --> 00:03:01,760
Speaker 2: side that as we see some activity in the housing

69
00:03:01,840 --> 00:03:05,120
Speaker 2: market pickup, we should start to see some competitive pressures

70
00:03:05,160 --> 00:03:07,840
Speaker 2: come through. Because today there hasn't been much going on

71
00:03:07,919 --> 00:03:09,920
Speaker 2: in terms of lending for housing, so there hasn't been

72
00:03:09,919 --> 00:03:13,040
Speaker 2: anything to be too competitive about. So he is hopeful,

73
00:03:13,040 --> 00:03:15,600
Speaker 2: I suppose an optimistic that those margins will start to

74
00:03:15,600 --> 00:03:17,239
Speaker 2: come down a bit and relief will be felt for

75
00:03:17,360 --> 00:03:18,080
Speaker 2: mortgage owners.

76
00:03:18,280 --> 00:03:20,360
Speaker 1: Kaitlyn, thanks for running us through that. Appreciate It's Kaitlyn

77
00:03:20,360 --> 00:03:24,119
Speaker 1: Park and milfed ESTC Management. For more from hither Duplessy

78
00:03:24,160 --> 00:03:27,000
Speaker 1: Allen Drive. Listen live to news talks. It'd be from

79
00:03:27,080 --> 00:03:30,680
Speaker 1: four pm weekdays, or follow the podcast on iHeartRadio