1 00:00:00,320 --> 00:00:01,200 Speaker 1: Bryan Bridge. 2 00:00:02,279 --> 00:00:05,600 Speaker 2: Now, big debate. Obviously, it's been happening here, We've been 3 00:00:05,640 --> 00:00:09,400 Speaker 2: doing it on air. It's about which reserve bank New 4 00:00:09,480 --> 00:00:14,720 Speaker 2: Zealand or Australia fared better in trying to tackle inflation. 5 00:00:15,200 --> 00:00:18,919 Speaker 2: Paul Bloxham, the HSBC Economists, the rock Star Economists, has 6 00:00:18,960 --> 00:00:20,960 Speaker 2: been looking at this and he's done a paper on 7 00:00:21,000 --> 00:00:24,120 Speaker 2: it which I've been perusing this afternoon. Paul, good evening, 8 00:00:25,239 --> 00:00:27,280 Speaker 2: good ame, Hey, great to have you on the show. 9 00:00:27,480 --> 00:00:30,120 Speaker 2: Tell me about the report that you guys have done 10 00:00:30,120 --> 00:00:33,240 Speaker 2: from HSBC. Who did better? Who fared better? 11 00:00:34,800 --> 00:00:37,720 Speaker 1: Yeah, So we've been comparing the Australian and the New 12 00:00:37,800 --> 00:00:41,800 Speaker 1: Zealand experience post pandemic. So as we know, both countries 13 00:00:41,840 --> 00:00:45,080 Speaker 1: had this surge in inflation and inflation picked up a 14 00:00:45,120 --> 00:00:47,760 Speaker 1: lot in twenty twenty two. It' got to somewhere between 15 00:00:47,800 --> 00:00:50,840 Speaker 1: seven and eight percent, depending on which economy you're talking about, 16 00:00:51,040 --> 00:00:53,640 Speaker 1: And of course both central banks took slightly different approaches 17 00:00:53,680 --> 00:00:56,720 Speaker 1: in terms of managing. The RBA lifted rates by four 18 00:00:56,800 --> 00:00:59,840 Speaker 1: hundred and twenty five basis points and really intentionally to 19 00:01:00,600 --> 00:01:03,720 Speaker 1: not slow the economy as much, take longer about getting 20 00:01:03,720 --> 00:01:06,640 Speaker 1: inflation down, but stay close to full employment and they 21 00:01:06,680 --> 00:01:09,360 Speaker 1: seem to have delivered that. And the RBNZ took the 22 00:01:09,400 --> 00:01:11,839 Speaker 1: approach of needing to get inflation down fast, they lifted 23 00:01:11,880 --> 00:01:14,039 Speaker 1: interest rates by more and in the end pushed the 24 00:01:14,080 --> 00:01:17,000 Speaker 1: economy into a bigger downturn to get to get inflation down. 25 00:01:17,040 --> 00:01:21,080 Speaker 1: And so they're both different choices and they both have 26 00:01:21,160 --> 00:01:24,880 Speaker 1: had different outcomes. You know, in New Zealand's case, inflation 27 00:01:24,920 --> 00:01:27,679 Speaker 1: has come down faster and it's back where the RBNZ 28 00:01:27,840 --> 00:01:30,440 Speaker 1: needs it to be. And after those rate rises, well, 29 00:01:30,480 --> 00:01:32,279 Speaker 1: of course you've had one hundred and seventy five basis 30 00:01:32,280 --> 00:01:36,080 Speaker 1: points of rate cuts so far. In Australia's case, having 31 00:01:36,080 --> 00:01:39,600 Speaker 1: not lifted rates as much, the economy is still pretty full, 32 00:01:39,840 --> 00:01:41,760 Speaker 1: close to full employment, and the RBA, of course has 33 00:01:41,760 --> 00:01:44,080 Speaker 1: only been able to cut interest rates twenty five basis points. 34 00:01:44,080 --> 00:01:46,959 Speaker 1: So it really depends on what weight you put on 35 00:01:47,160 --> 00:01:50,440 Speaker 1: the importance of getting inflation down fast, how important you 36 00:01:50,480 --> 00:01:52,840 Speaker 1: think it is for the unemployment rate to stay low 37 00:01:52,840 --> 00:01:54,880 Speaker 1: which and what weight you put on that, and how 38 00:01:54,960 --> 00:01:57,720 Speaker 1: much weight you put on the sort of the idea 39 00:01:57,760 --> 00:02:00,560 Speaker 1: that interest rates come down as well. You know, the 40 00:02:00,600 --> 00:02:02,680 Speaker 1: two are very very close. We found in the studies 41 00:02:02,720 --> 00:02:04,520 Speaker 1: it depends on which way you put on those things. 42 00:02:04,720 --> 00:02:08,280 Speaker 1: But on the margin, I think if you're prioritizing stabilizing 43 00:02:08,280 --> 00:02:13,040 Speaker 1: your economy as well and minimizing the volatility, then Australia 44 00:02:13,040 --> 00:02:14,400 Speaker 1: probably beares a little bit better. 45 00:02:15,080 --> 00:02:18,279 Speaker 2: The answer surely is in the number of economic refugees 46 00:02:18,280 --> 00:02:22,000 Speaker 2: that fled this country to head to the other one. 47 00:02:22,240 --> 00:02:25,919 Speaker 1: You know, well, it's part of the adjustment mechanism. Certainly 48 00:02:25,919 --> 00:02:28,480 Speaker 1: that the labor market's been stronger in Australia and it's 49 00:02:28,520 --> 00:02:30,400 Speaker 1: been weaker in New Zealand, and it's meant that people 50 00:02:30,400 --> 00:02:33,480 Speaker 1: have moved from New Zealand to Australia to get jobs. 51 00:02:33,560 --> 00:02:37,200 Speaker 1: And so if you're measuring it purely on the labor 52 00:02:37,240 --> 00:02:39,800 Speaker 1: market performance, you would definitely say Australia has been in 53 00:02:39,840 --> 00:02:42,160 Speaker 1: better shape. We've had an unemployment rate that's gone up 54 00:02:42,200 --> 00:02:45,200 Speaker 1: by only point six percentage points. It's picked up from 55 00:02:45,200 --> 00:02:47,399 Speaker 1: three and a half percent to four point one over 56 00:02:47,440 --> 00:02:49,200 Speaker 1: the last two and a half years. And in New 57 00:02:49,280 --> 00:02:51,760 Speaker 1: Zealand the unemployment rates picked up by almost two percentage points. 58 00:02:51,760 --> 00:02:53,640 Speaker 1: It's gone up from three point two to five point one. So, 59 00:02:53,840 --> 00:02:55,919 Speaker 1: you know, if it's just on the labor market, yes, 60 00:02:55,960 --> 00:02:59,200 Speaker 1: Australia is in better shape. If it's on the inflation performance, well, 61 00:02:59,240 --> 00:03:02,240 Speaker 1: New Zealand's got it to inflation down faster than Australia has. 62 00:03:02,360 --> 00:03:04,200 Speaker 2: And you guys are still selling a bit closer to 63 00:03:04,240 --> 00:03:07,080 Speaker 2: the wind I suppose, and with Trump's terrorists et centa, 64 00:03:07,160 --> 00:03:08,760 Speaker 2: things could get a bit here. So we'll have to 65 00:03:08,800 --> 00:03:11,760 Speaker 2: wait and see how that plays out GDP figures. You've 66 00:03:11,760 --> 00:03:14,280 Speaker 2: got the figures out tomorrow. What are you expecting. 67 00:03:15,639 --> 00:03:17,800 Speaker 1: Well, we think GDP growth will have picked up pace. 68 00:03:17,919 --> 00:03:20,200 Speaker 1: This is the fourth quarter print for last year and 69 00:03:20,200 --> 00:03:22,840 Speaker 1: we think that it'll run at half a percent in 70 00:03:22,880 --> 00:03:25,440 Speaker 1: the quarter, and that'll be up from running at point 71 00:03:25,440 --> 00:03:27,880 Speaker 1: twos and point threes over the previous quarter. So we're 72 00:03:27,880 --> 00:03:31,400 Speaker 1: in a modest consumer upswing. We've already seen it in 73 00:03:31,480 --> 00:03:34,520 Speaker 1: better retail numbers. We've seen it in improving consumer confidence 74 00:03:34,920 --> 00:03:37,840 Speaker 1: and that's because well, inflation is coming down, so cost 75 00:03:37,880 --> 00:03:41,200 Speaker 1: of living is improving a bit, and we've seen tax 76 00:03:41,240 --> 00:03:43,320 Speaker 1: cups in Australia in the second half of last year 77 00:03:43,360 --> 00:03:45,720 Speaker 1: cost of living measures as well. And we've got very 78 00:03:45,720 --> 00:03:48,560 Speaker 1: strong employment. You know, we're fully employed. The employment to 79 00:03:48,600 --> 00:03:51,600 Speaker 1: population ratio is at its highest level on record at 80 00:03:51,600 --> 00:03:53,839 Speaker 1: the moment, so people are spending a bit more because 81 00:03:53,840 --> 00:03:56,680 Speaker 1: they're quite confident. They're becoming more confident and that we 82 00:03:56,760 --> 00:03:59,640 Speaker 1: think is what's going to lift growth and show up 83 00:03:59,640 --> 00:04:00,400 Speaker 1: in tomorrow than Prince. 84 00:04:01,080 --> 00:04:05,080 Speaker 2: How are just outside of the headline figures that we're expecting. 85 00:04:05,120 --> 00:04:08,400 Speaker 2: How are Australians feeling about the economy, the state of 86 00:04:08,440 --> 00:04:10,480 Speaker 2: how things are well? 87 00:04:10,640 --> 00:04:14,440 Speaker 1: The consumer sentiment numbers have improved, so the pickup. The 88 00:04:14,440 --> 00:04:17,120 Speaker 1: low point was September last year, and then in October 89 00:04:17,160 --> 00:04:19,440 Speaker 1: and November they jumped quite a lot and then they 90 00:04:19,480 --> 00:04:21,359 Speaker 1: sort of held onto that level and they've approved a 91 00:04:21,360 --> 00:04:24,520 Speaker 1: little bit since the RBA delivered its first rate cut 92 00:04:24,560 --> 00:04:27,440 Speaker 1: as well. So I would say they're a lot better 93 00:04:27,440 --> 00:04:30,919 Speaker 1: than they were, but we're still not above average. You know, 94 00:04:30,960 --> 00:04:34,080 Speaker 1: the consumers are still pretty cautious, but certainly better than 95 00:04:34,080 --> 00:04:36,840 Speaker 1: it was, you know, late last year. 96 00:04:38,120 --> 00:04:39,760 Speaker 2: Paul, thank you very much for that. Great to have 97 00:04:39,800 --> 00:04:42,880 Speaker 2: you on as always, Paul Blocks on the HSBC Chief Economists. 98 00:04:43,200 --> 00:04:46,360 Speaker 2: For more from Hither Duplessy Allen Drive, listen live to 99 00:04:46,480 --> 00:04:49,520 Speaker 2: news talks it'd be from four pm weekdays, or follow 100 00:04:49,560 --> 00:04:51,320 Speaker 2: the podcast on iHeartRadio.