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Speaker 1: Now, inflation has increased slightly more than expected. It came

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Speaker 1: in at two and a half percent for Q one,

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Speaker 1: a little bit more than the two point four percent

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Speaker 1: we were expecting. We spoke to Gareth Kennan from in

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Speaker 1: Infometrics about it earlier. It was a little bit of

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Speaker 1: gloomy about our economy. And Liam Dan, the Herald's business

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Speaker 1: editor at large, is here to be a little bit

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Speaker 1: more gloomy again, aren't you, leam.

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Speaker 2: Yeah, I'm not here to cheer you up.

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Speaker 1: Sorry, what's the gloomy you're bringing at me?

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Speaker 2: Well, the inflation. The good news is the inflation's maybe

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Speaker 2: a bit of a red hearing. I mean, we all

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Speaker 2: hate it. At the food prices went up. We know

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Speaker 2: that the cheese and the milk and everything pushed it up,

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Speaker 2: and that it's got something to do with commodity prices,

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Speaker 2: and that's good for the economy. But and the coffee prices, yeah, coffee, chocolate,

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Speaker 2: all the good things. But what the reason that the

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Speaker 2: economists have confidence that inflation isn't coming back to haunt

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Speaker 2: us unfortunately, is because the economy is gone.

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Speaker 1: We're all going to get pounders.

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Speaker 2: Trade war struggling, yeah, yeah, and so you look at

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Speaker 2: some of the stuff I read the Infometrics piece. Obviously

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Speaker 2: A and Z this week as well had a piece

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Speaker 2: saying they now think that the OCO will have to

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Speaker 2: go to two point five, which is about fifty basis

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Speaker 2: points lower than they had said previously. And you know

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Speaker 2: the sense that the thing about the A n Z

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Speaker 2: one is that they hadn't even factored in. They're not

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Speaker 2: factoring in the fallout from the trade wars yet, So.

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Speaker 1: No, this is just how crappy our recovery is.

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Speaker 2: Well, I guess what, there hasn't been any direct fallout

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Speaker 2: from the trade wars yet, but the shock to confidence

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Speaker 2: I think is an issue. So you know, the hit

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Speaker 2: to the key we say, of the market turmoil, and

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Speaker 2: if you're a business thinking about what's going to happen,

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Speaker 2: you know it just our recovery was such a fledgling,

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Speaker 2: you know, tiny little thing that finally had this recovery going,

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Speaker 2: and now to have this big shock to global confidence.

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Speaker 2: It's really the worst possible timing. So you know, I

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Speaker 2: would think, you know, we may well, we will probably

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Speaker 2: see the Reserve Bank go lower, and we've probably got

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Speaker 2: to see them I think go go fifty basis points

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Speaker 2: in May, because we kind of need to get ahead

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Speaker 2: of the curve before for you know, another gloomy winter. Yes, but.

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Speaker 1: If they go fifty basis points in May, you're doing

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Speaker 1: the very thing that everybody says you shouldn't do, which

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Speaker 1: is overreact to the trade war, right you should ye

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Speaker 1: sit tight?

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Speaker 2: Yeah, I thought about that. I mean May eight, So

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Speaker 2: we've got a while. I think I think it's five

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Speaker 2: weeks or thereabout by that.

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Speaker 1: You know.

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Speaker 2: Look, and I hope I'm wrong. I hope things go

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Speaker 2: really well from here. Yeah. Yeah, and Donald Trump negotiates

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Speaker 2: with all these countries and solves everything with China and

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Speaker 2: it doesn't need to happen, but it doesn't quite feel

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Speaker 2: like that.

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Speaker 1: But okay, so here here's my counter argument to that.

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Speaker 1: Donald Trump is not an idiot. I mean, you know,

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Speaker 1: regardless of what you think about him, he's very very

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Speaker 1: he cares very deeply what happens in the markets and

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Speaker 1: what happens in the economy. Right, that's the kind of

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Speaker 1: thing that he measures himself by. So if he sees

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Speaker 1: things starting to go tit's up. He's not going to

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Speaker 1: go down.

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Speaker 2: Yeah, He's paused various things, and he could but but

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Speaker 2: he doesn't really care about our economy. So no, and

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Speaker 2: so but.

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Speaker 1: If the war, if the wall economy really takes a hammering,

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Speaker 1: it affects their economy, doesn't It does.

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Speaker 2: But we are very vulnerable to China. And look, you know,

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Speaker 2: good things can happen. You know, people have talked about it.

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Speaker 2: There's all sorts of effects. But I guess the issue

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Speaker 2: at the moment is, you know, like we saw it

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Speaker 2: in the card spending data earlier this week, people have

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Speaker 2: put their wallets away and that's not supposed to happen.

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Speaker 2: The interest rates are supposed to come down and you're

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Speaker 2: supposed to spend more. So you know, I'm reserving judgment

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Speaker 2: too on the on the tariff that the actual final

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Speaker 2: fallout from all the tariffs how it lands, say, you know,

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Speaker 2: nine months, twelve months from now.

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Speaker 1: But what it's doing to our heads as well right now, the.

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Speaker 2: Chaos and uncertainty is making it very difficult for this

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Speaker 2: recovery to get going.

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Speaker 1: Do you reckon it's gone to Nichola Willis's head.

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Speaker 2: Yet, Well, she's staying she's very much staying calm as

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Speaker 2: she should. You know, good, good, that's what you want

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Speaker 2: from the leadership and she's saying she's going to stick

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Speaker 2: to the script. There's no room for you know, loosening

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Speaker 2: the fiscal purse strings yet. But you know, it could

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Speaker 2: go either way because it's again it's I mean.

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Speaker 1: She doesn't need to loosen it. They're loose already. The

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Speaker 1: woman spends more than Grant robertson.

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Speaker 2: Yeah, but you know, like it is still a constraint

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Speaker 2: on growth and if you know, if this turns into

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Speaker 2: a GFC type scenario. And I'm looking at some stuff

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Speaker 2: from Fitch today, Fitch Ratings looking at global growth this year,

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Speaker 2: and they're forecasting it to be the worst, not counting

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Speaker 2: the first pandemic year, the worst since twenty two thousand

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Speaker 2: and nine. So they're talking about global growth coming down

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Speaker 2: to very very low levels. And yeah, I hope, I

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Speaker 2: certainly hope we don't have to look at any kind

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Speaker 2: of fiscal stimulus. I know it's a really bad time

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Speaker 2: for it because we don't have much room to borrow anymore.

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Speaker 1: But someone says, you're just depressed because of daylight saving

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Speaker 1: in winter.

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Speaker 2: Yeah, I mean, and the weather is lousy, that's right,

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Speaker 2: And we got a stork, so that's always a risk.

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Speaker 1: Thanks, Ully, I'm appreciated.

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Speaker 2: For more from Heather Duplessy Allen Drive, Listen live to

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Speaker 2: news talks. It'd be from four pm weekdays, or follow

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