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Speaker 1: Alway, the Reserve Band kept their promised to cut the

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Speaker 1: official cash rate yesterday afternoon, dropping twenty five basis points

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Speaker 1: to three point five percent. Nikola Willis has welcomed the news.

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Speaker 1: She says she's keeping a close eye on the ongoing

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Speaker 1: global economic instability ahead of this year's budget. They but meanwhile,

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Speaker 1: and Barbara Edmonds says that they should be spending a

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Speaker 1: bit more right now to help us through this bad

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Speaker 1: time and joining us is Infometrics principal economists Brad Olsen

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Speaker 1: and good morning to you. Brad.

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Speaker 2: Good morning.

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Speaker 1: So in your opinion, this was the right move, Yes.

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Speaker 2: Very much the right move, very sensible and in line

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Speaker 2: what the Reserve Bank has been talking about previously anyway,

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Speaker 2: And I think that's important because when we've been looking

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Speaker 2: through all of the last couple of days, what's become

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Speaker 2: very clear and again very clear this morning, is all

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Speaker 2: of this can change in an instance. So I think

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Speaker 2: for the Reserve Bank, they made it very clear that

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Speaker 2: they are looking closely at the tariffs. They're trying to

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Speaker 2: understand all of those trials and tribulations, but at the

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Speaker 2: same time they're not willing to make a ration move.

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Speaker 2: They're just trying to understand what's going on.

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Speaker 1: First, all right, well, the tap was said the whole

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Speaker 1: thing when I was talking about this yesterday. We're going, yes,

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Speaker 1: if you're going to offer certainty to business, just keep

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Speaker 1: going with the plan. Because the plan is an extreme

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Speaker 1: zero point twenty five. So that's all right. But we

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Speaker 1: wanted to kind of know what the Reserve Bank thought

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Speaker 1: about the global economy. We had tariffs coming into effect

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Speaker 1: yesterday afternoon. Economists are alsaying they don't know what they're

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Speaker 1: going to do to the economy. Did you get any

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Speaker 1: better picture from the Reserve Bank?

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Speaker 2: There was a little bit more clarity in there. We

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Speaker 2: still didn't expect them to have a full, full understanding,

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Speaker 2: and I think again i'd rather they came out in

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Speaker 2: May when they do their next month policy statement, with

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Speaker 2: a full suite of forecast, with a whole bunch of

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Speaker 2: information that have had time to digest. Also, of course,

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Speaker 2: the changes that have even come through over night, I

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Speaker 2: mean a pause to the tariffs, but also ratching up

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Speaker 2: tensions on China changes the game again for New Zealand.

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Speaker 2: But the Bank did say that they were clearly concerned

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Speaker 2: about what it meant for the New Zealand Economy said

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Speaker 2: that the increased trade barriers globally do create downside risks

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Speaker 2: to the outlook for economic activity and inflation in New Zealand.

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Speaker 2: And on the back of that you have seen markets

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Speaker 2: and in fact some of the wording from the Reserve

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Speaker 2: Bank generally imply that, yes, interest rates could go lower

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Speaker 2: because of this. But there was also a little bit

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Speaker 2: of disagreement amongst the Monetary Policy Committee, it seems, and

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Speaker 2: I think this is healthy because they really do need

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Speaker 2: to grapple with what is a pretty challenging topic. Most

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Speaker 2: members of the committee consider that recent global policy developments

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Speaker 2: like the tariff stuff has shifted the balance of risks

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Speaker 2: in New Zealand inflation lower. Others though noted uncertainty around

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Speaker 2: the inflation outlook and the risks remain balanced. And again

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Speaker 2: I think that's appropriate. Yes, we're seeing tariffs around the

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Speaker 2: world and in some senses that could raise prices, but

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Speaker 2: also if you have weaker economic activity in New Zealand

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Speaker 2: because we're not trading as much, you could equally see

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Speaker 2: lower inflashy risks. So they have got to balance this

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Speaker 2: all up.

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Speaker 1: And how about the dollar, because I mentioned this morning,

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Speaker 1: if the dollar remains low. That means it actually negates

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Speaker 1: the ten percent increase in prices of our products at America,

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Speaker 1: if you know what I mean. So if we have

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Speaker 1: an isolight low dollar, then then we can still keep

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Speaker 1: our exports at a good price point in America. How's

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Speaker 1: our dollar doing? What's happening with our dollar?

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Speaker 2: I think I saw overnight it's pushed up just to touch,

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Speaker 2: but that's equally because of this expectation and talk of

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Speaker 2: a bit of a pause on tariffs. So I think

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Speaker 2: last I saw it had popped just above fifty six

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Speaker 2: US sense that had been trading more on that fifty

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Speaker 2: five and low fifty five through parts of yesterday. Again,

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Speaker 2: this is almost an automatic stabilizer sort of effect, where

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Speaker 2: when the challenges come through with those high prices, the

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Speaker 2: dollar drops to try and compensate, and at the same time,

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Speaker 2: if you start to see those better conditions, then the

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Speaker 2: dollar starts to push up a little bit higher. So

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Speaker 2: I think all of this highlights that we're still in

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Speaker 2: the early stages of trying to understand this. The Reserve

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Speaker 2: Bank didn't want to commit too much firepower too quickly.

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Speaker 2: That's been proven overnight to be very much the right,

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Speaker 2: call a little bit more of a stay of the course,

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Speaker 2: and they'll continue to assess in the future. Is good

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Speaker 2: All the while the global economy still convulsing, and here

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Speaker 2: in New Zealand we're sort of just watch, waiting and worrying.

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Speaker 1: Good on your Brad Olson. I thank you, and of

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Speaker 1: course Christian Hawksby made the announcements yesterday. He's there for

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Speaker 1: the next six months and then we don't know what's happening.

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Speaker 1: Is he a placeholder? Is he acceptable to the government,

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Speaker 1: Will the government then start agitating for their own or

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Speaker 1: a more approvable Reserve Bank governor? Will find that out

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Speaker 1: in the future. Ana Courst the next OCA in May.

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Speaker 2: For more from early edition with Ryan Bridge.

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Speaker 1: Listen live to News Talks at b from five am weekdays,

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