1 00:00:00,080 --> 00:00:02,120 Speaker 1: Now Reserve Bank Governor Adrian Or had to do a 2 00:00:02,120 --> 00:00:05,040 Speaker 1: fair bit of gymnastics today to explain the cut to 3 00:00:05,080 --> 00:00:08,280 Speaker 1: the official cash rate And if the goal of monetary 4 00:00:08,280 --> 00:00:10,840 Speaker 1: policy in this situation is for a soft landing, can 5 00:00:11,160 --> 00:00:13,240 Speaker 1: you say you've actually delivered that? And I don't know 6 00:00:13,240 --> 00:00:18,120 Speaker 1: how to answer your other question really so yeah. Genetive 7 00:00:18,160 --> 00:00:20,439 Speaker 1: Trainey is The Herald's Wellington Business editor. She was in 8 00:00:20,440 --> 00:00:23,600 Speaker 1: the room this afternoon. Adrian A hey, Heather couldn't say 9 00:00:23,600 --> 00:00:24,520 Speaker 1: he got it wrong the way. 10 00:00:25,880 --> 00:00:27,840 Speaker 2: No, he didn't want to say he got it wrong. 11 00:00:27,960 --> 00:00:30,800 Speaker 2: So the question that I asked the governor was back 12 00:00:30,840 --> 00:00:33,840 Speaker 2: in May when the Reserve Bank suggested the OCI would 13 00:00:33,840 --> 00:00:37,640 Speaker 2: only be cut later next year. Was the Reserve Bank 14 00:00:37,680 --> 00:00:41,440 Speaker 2: wrong in May? Or was it bluffing? Was it draw boning? 15 00:00:41,520 --> 00:00:43,840 Speaker 2: Was it trying to talk the market into keeping interest 16 00:00:43,920 --> 00:00:47,040 Speaker 2: rates elevated? And Adrian all said. What he did say 17 00:00:47,080 --> 00:00:50,280 Speaker 2: was that no, they weren't bluffing, that they weren't you 18 00:00:50,600 --> 00:00:54,680 Speaker 2: just trying to talk the market into doing what it wanted, 19 00:00:55,280 --> 00:00:58,280 Speaker 2: but rather that the economic data that has come out 20 00:00:58,320 --> 00:01:01,680 Speaker 2: since May has suggested there's the economy is quite a 21 00:01:01,680 --> 00:01:06,320 Speaker 2: bit weaker than expected and hence the reason the IRBZ 22 00:01:06,480 --> 00:01:12,520 Speaker 2: cut today and has projected further cuts twenty five basis points, 23 00:01:12,560 --> 00:01:14,839 Speaker 2: you know, at each next meeting. 24 00:01:15,280 --> 00:01:17,840 Speaker 1: His argument basically came down to things have changed so 25 00:01:17,959 --> 00:01:21,480 Speaker 1: much between May and August that suddenly a cut was 26 00:01:21,520 --> 00:01:23,760 Speaker 1: on was on the cards and actually happening. Do you 27 00:01:23,800 --> 00:01:24,160 Speaker 1: buy that? 28 00:01:25,640 --> 00:01:28,880 Speaker 2: Look, I think the consensus among economists was that the 29 00:01:28,880 --> 00:01:32,720 Speaker 2: Reserve Bank was wrong in May. So back then the 30 00:01:32,760 --> 00:01:37,360 Speaker 2: economy was not performing strongly. You know, anyone who walks 31 00:01:37,400 --> 00:01:40,880 Speaker 2: around town or you know, is trying to manage their 32 00:01:40,880 --> 00:01:43,840 Speaker 2: budget or whatever, realizes that that things are not not great. 33 00:01:44,120 --> 00:01:46,919 Speaker 2: But the Reserve Bank was an outlier at that point. 34 00:01:47,040 --> 00:01:50,520 Speaker 2: It didn't seem to recognize the weakness in the economy 35 00:01:50,560 --> 00:01:53,000 Speaker 2: to the extent that everyone else did. I mean markets 36 00:01:53,000 --> 00:01:55,840 Speaker 2: back then we were pricing in cuts as well, so 37 00:01:56,240 --> 00:01:58,880 Speaker 2: you know, they were shocked that the Reserve Bank thought 38 00:01:59,640 --> 00:02:02,200 Speaker 2: they might need to be hiked again. So I think 39 00:02:02,200 --> 00:02:05,920 Speaker 2: the consensus ABI and Z was wrong back in May. 40 00:02:06,040 --> 00:02:09,440 Speaker 1: Yeah, yeah, yeah, totally. Hey, I was actually quite impressed 41 00:02:09,440 --> 00:02:11,720 Speaker 1: with how he handled it because he is known to, 42 00:02:11,919 --> 00:02:14,120 Speaker 1: like me, wears his emotions quite close to the skin. 43 00:02:15,200 --> 00:02:17,040 Speaker 2: Yeah. Look, I mean this is the thing. So I 44 00:02:17,040 --> 00:02:19,120 Speaker 2: think there's two schools of thought have come out of 45 00:02:19,120 --> 00:02:22,040 Speaker 2: this flip flop situation. You have people like Brad Olsen, 46 00:02:22,120 --> 00:02:25,720 Speaker 2: the Infametrix economists who think the Reserve Bank's credibility has 47 00:02:25,760 --> 00:02:29,560 Speaker 2: been eroded because it's changed its positions so drastically in 48 00:02:29,600 --> 00:02:31,920 Speaker 2: such a short space of time. So how do we 49 00:02:31,960 --> 00:02:34,559 Speaker 2: know when it has these projections? Are they really projections 50 00:02:35,000 --> 00:02:38,120 Speaker 2: or is it just kind of like basically trying to 51 00:02:38,120 --> 00:02:40,320 Speaker 2: talk the market this way that way. Then you have 52 00:02:40,360 --> 00:02:45,200 Speaker 2: other economists like bean Z's Stephen Topless, and he says, well, yep, 53 00:02:45,639 --> 00:02:47,919 Speaker 2: probably got it wrong in May, but actually really good 54 00:02:47,919 --> 00:02:52,280 Speaker 2: that they're correcting their position now, because in Stephen Topless's view, 55 00:02:52,280 --> 00:02:55,400 Speaker 2: at least a cut was definitely the right call to 56 00:02:55,480 --> 00:02:58,640 Speaker 2: make today and actually should have been made earlier. So 57 00:02:59,320 --> 00:03:01,120 Speaker 2: I think it is it and an interesting tension as 58 00:03:01,160 --> 00:03:04,080 Speaker 2: to how how critical you want what you want to 59 00:03:04,080 --> 00:03:06,360 Speaker 2: be of the Irby and Z. The other thing I 60 00:03:06,360 --> 00:03:09,239 Speaker 2: would point out is that they've started putting emphasis on 61 00:03:09,280 --> 00:03:12,560 Speaker 2: different data. Previously, it sounded like the Reserve Bank put 62 00:03:12,560 --> 00:03:14,840 Speaker 2: emphasis on the CPI, you know, the inflation data, the 63 00:03:14,880 --> 00:03:18,320 Speaker 2: GDP data, the Tier one data. Now it sounds like 64 00:03:18,360 --> 00:03:20,720 Speaker 2: they're putting a bit more emphasis on on the business 65 00:03:20,760 --> 00:03:24,320 Speaker 2: confidence surveys, the Tier two data, some of the more 66 00:03:24,639 --> 00:03:27,639 Speaker 2: real time information about how the economy is going. That's 67 00:03:27,639 --> 00:03:30,400 Speaker 2: the sort of that's the sort of information that that 68 00:03:30,480 --> 00:03:33,800 Speaker 2: markets track really closely. That is perhaps, yeah, perhaps a 69 00:03:33,800 --> 00:03:34,960 Speaker 2: wee change of approach there. 70 00:03:35,040 --> 00:03:36,840 Speaker 1: That was very interesting. I noticed that as well. Jennay, 71 00:03:36,840 --> 00:03:40,080 Speaker 1: Thank you so much, Chaintive Training, the Heralds Wellington Business Editor. 72 00:03:40,960 --> 00:03:44,120 Speaker 1: For more from Heather Duplassy Allen Drive, listen live to 73 00:03:44,200 --> 00:03:47,360 Speaker 1: news talksa'd be from four pm weekdays, or follow the 74 00:03:47,400 --> 00:03:49,000 Speaker 1: podcast on iHeartRadio.