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Speaker 1: So odd day economically today, because it's entirely possible we'll

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Speaker 1: get a GDP number that simply reminds us of the

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Speaker 1: good old days. The key one data will most likely

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Speaker 1: show growth many say about zero point seven. This is

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Speaker 1: for Gen Feb and March. Of course, it's what happened

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Speaker 1: after that that's the issue. Nick Toughley is asb's chief economist,

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Speaker 1: back with this, Nick, morning to you.

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Speaker 2: Good morning.

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Speaker 1: Are you on zero point seven?

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Speaker 2: Yes, we are indeed so lining up before we were

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Speaker 2: what we saw last time, and that would be a

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Speaker 2: pretty good growth rate if we could actually continue that

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Speaker 2: sort of year and year out.

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Speaker 1: Yeah, wouldn't it just But we're not going to And

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Speaker 1: that's the problem, isn't it.

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Speaker 2: Yes, we do see things sort of slowing a bit

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Speaker 2: through the middle parts of the year after that, and

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Speaker 2: we've just got that general challenge of productivity growth. It's

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Speaker 2: still pretty slow, and population growth has slowed as well.

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Speaker 1: And April, May and June, what do you reckon for

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Speaker 1: the second quarter? What's your vibe on what's just happened

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Speaker 1: to us?

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Speaker 2: Yeah, we're down to about sort of point three point four.

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Speaker 2: So look the early parts of the year, in late

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Speaker 2: last year had good tailwinds out of basically that's key.

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Speaker 2: Export sectors were all sort of reallyiring, and that also

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Speaker 2: tap off a little bit. And what we are waiting

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Speaker 2: to see is it's us, our householders, getting our wallets

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Speaker 2: out and starting to spend money a bit more.

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Speaker 1: Okay, are you still confident this is the RB line

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Speaker 1: that hang on and more money's coming and the interest

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Speaker 1: rates are dropping and this is going to happen. Do

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Speaker 1: you see that actually unfolding?

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Speaker 2: Well, we do in the sense that there will be

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Speaker 2: a lot more people refixing their mortgage at a lower rate.

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Speaker 2: So one thing that I do have a bit of

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Speaker 2: a question mark about is the housing market is a

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Speaker 2: bit of a barometer of how low people think interest

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Speaker 2: rates are. And net market's still looking pretty soft, as

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Speaker 2: we saw in some figures out there. So that question

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Speaker 2: mark about how low do we need rates to go

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Speaker 2: to stimulate your economy versus the fact that in the

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Speaker 2: short term also facing inflation still remaining pressly.

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Speaker 1: So it's a bit of buind That was my next question.

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Speaker 1: So the prices are going up, powers up, waters up,

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Speaker 1: rates are up, insurance is up. So yes, I've got

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Speaker 1: a cheaper mortgage, but guess where it's going.

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Speaker 2: Yeah, there is an element of that, But what we've

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Speaker 2: got to remember is that a lot of the other

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Speaker 2: sort of more market driven domestic inflation is actually continuing

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Speaker 2: to slow. But we are getting some of those rebounds

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Speaker 2: and things, and one thing the Reserve Bank's going to

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Speaker 2: be mindful of. We could be hitting three percent inflation.

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Speaker 2: Some of that's being driven by just sort of hopefully

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Speaker 2: one of things, but food and fuel the things you

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Speaker 2: buy all the time, and you tend to remember the

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Speaker 2: prices of those.

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Speaker 1: You're adjusting your view on neutral for the RB Well,

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Speaker 1: we still.

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Speaker 2: Think somewhere around about that sort of three three and

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Speaker 2: a quarter percent, So it's sort of roughly where we

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Speaker 2: are now. It's just the question mark is do we

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Speaker 2: need to go below neutral given the headwinds that are

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Speaker 2: potentially coming globally And it's a case of the Reserve

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Speaker 2: Bank just having a bit of a white knuckle ride

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Speaker 2: in the short term over the spike in inflation and

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Speaker 2: will that have us going here we go again? Seven percent?

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Speaker 1: Good stuff, Nick, Appreciate your company always, Nick Tuffley asb

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Speaker 1: Chief Economists. For more from the Mic Asking Breakfast, Listen

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