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Speaker 1: Right. It is CPI day. Yay everybody. It's inflation data

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Speaker 1: for quarter two that will be released by Stats New

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Speaker 1: Zealand at ten forty five this morning, so stay tuned

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Speaker 1: for that on news talk, se'd be most banks are

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Speaker 1: expecting a slight drop, but what does it mean for

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Speaker 1: consumers and what does it mean for your mortgage? Joining

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Speaker 1: me now is an z economist and CPI forecaster Henry Russell. Henry,

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Speaker 1: good morning, Good morning. What would trigger a rate well,

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Speaker 1: what what number do we do we need to trigger

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Speaker 1: a rate cut? Do you reckon?

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Speaker 2: Well, it's pretty hard to put a number on it.

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Speaker 2: We're going to have to see what the data brings

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Speaker 2: today and have a look at the details. But in

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Speaker 2: terms of what we are expecting, it is good news.

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Speaker 2: Inflation is expected to fall from four percent to three

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Speaker 2: point three percent. That is below what the Reserve Bank

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Speaker 2: expected back in May, a forecast three point six percent.

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Speaker 2: But that does show in my own information is falling

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Speaker 2: a little fast than they expected, but a lot of

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Speaker 2: that reflects weakness across the volatile components, so things like

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Speaker 2: food prices, fuel and the FIRS, and the Reserve Bank

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Speaker 2: doesn't really have a lot of influence over these things,

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Speaker 2: and so really what they'll be focusing on is domestic

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Speaker 2: inflation or non tradable inflation. There we're actually expecting the

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Speaker 2: same outcome as the Reserve Bank. That's not to say

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Speaker 2: that that wouldn't mark progress. It would end the preserved

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Speaker 2: banks run for consecutive upward surprises since it went on hold.

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Speaker 2: But we just think it's slightly too early for that

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Speaker 2: to give the greenlighte for an imminent ocr CUD as

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Speaker 2: soon as August.

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Speaker 1: So you're saying non basically holding non tradable steady would

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Speaker 1: be a win.

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Speaker 2: So we're expecting it to fall from five point eight

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Speaker 2: to five point three percent, So it is falling and

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Speaker 2: the quarterly run rate would be closing in on what's

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Speaker 2: consistent with inflation at target. But yeah, it does seem

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Speaker 2: like a stretch for a cut to come in August,

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Speaker 2: but certainly the risks are tilting towards a cut being

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Speaker 2: delivered this year. But we'll have to see what the

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Speaker 2: data brings today.

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Speaker 1: Do we need more, do we need quarter three data

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Speaker 1: before making any decisions or with the Reserve Bank need

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Speaker 1: quarter three data before making decisions on that, or could

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Speaker 1: could it potentially be based off just quarter one and two.

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Speaker 2: I think they will like to see the Q three

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Speaker 2: data just in the sense that that is likely to

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Speaker 2: confirm that inflation is back within the one to three

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Speaker 2: percent target band. But look, there's no denying that recent

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Speaker 2: economic data has been very, very soft in New Zealand.

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Speaker 2: The housing market is cooling, the labor market is weakening,

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Speaker 2: consumer spending as in the business surveys are telling us

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Speaker 2: that businesses are under pressure. But importantly they're also telling

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Speaker 2: us that businesses are no longer able to raise their

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Speaker 2: prices due to week demand, and that cost pressures are moderating.

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Speaker 2: All these things are adding to our confidence that inflation

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Speaker 2: is heading back to target and it's likely to stay there.

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Speaker 2: But we really do need to see those dynamics present

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Speaker 2: in the inflation data today to confirm to confirm.

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Speaker 1: That, Henry, thank you for Henry Russell, the Ainzeed Economist

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Speaker 1: and CPI forecast ahead of the announcement by Stats in

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Speaker 1: z our latest inflation data at ten forty five per morning.

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Speaker 2: For more from News Talk zed B, listen live on

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