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Speaker 1: So we all heard the doom and gloom at postcam yesterday.

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Speaker 2: I am advised that a quick resolution of the conflict

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Speaker 2: in the next few weeks would see the economy evolve

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Speaker 2: close to the preliminary forecasts, albeit with slightly higher inflation

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Speaker 2: in the near turn. A longer conflict would likely have

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Speaker 2: downside GDP impacts.

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Speaker 1: By the way, Brient crew this morning has come back

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Speaker 1: from one hundred and twenty dollars of barrels now back

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Speaker 1: under one hundred dollars, still floating around it with but

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Speaker 1: Sharon's Olner, A and Z chief economists with us this morning. Sharon,

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Speaker 1: good morning, good morning. Give it to us straight. How

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Speaker 1: bad is this going to get?

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Speaker 3: Well? Well, having spoken to them major world leaders, that's

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Speaker 3: the thing that we are in no position today. And

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Speaker 3: the Minister is quite right that the duration of the

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Speaker 3: shop is just as important as the size of it.

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Speaker 3: And as regards the size of it, I mean, oil

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Speaker 3: hit one hundred and twenty yesterday, now it's back under

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Speaker 3: one hundred. I mean, these moves are enormous, so very

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Speaker 3: very difficult to gauge the severity of the shop for

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Speaker 3: market at the moment. But yeah, some are shooting first

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Speaker 3: and ask some questions later. In terms of the market,

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Speaker 3: moves have been quite ferocious. But we're seeing not just

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Speaker 3: the oil price but other prices like bond yields coming

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Speaker 3: back a bit as well, which is good because we

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Speaker 3: had a wild day yesterday in the Zealand market.

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Speaker 1: Yeah it was pretty crazy, wasn't it. Do you think

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Speaker 1: Edell might come down a bit more today given what's

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Speaker 1: happening with that oil price?

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Speaker 3: Is it? Typically the New Zealand market reflects what's happened

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Speaker 3: in the US market overnight. So that I've just checked,

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Speaker 3: the US tenure yields have come back a long way,

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Speaker 3: so the New Zealand bond yields should follow hopefully on

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Speaker 3: the open. But we will continue to follow them up

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Speaker 3: and down however the volatility goes. And that's one of

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Speaker 3: the things that is easier to be certain about at

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Speaker 3: the moment, is that solatility is going to continue because

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Speaker 3: market are reacting to headlines that are all over the place, of.

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Speaker 1: Course, and then there's our reaction to those headlines too,

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Speaker 1: both businesses and consumers. And we saw what happened with

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Speaker 1: Trump and his tariffs. You know, we all went, oh,

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Speaker 1: not spend any money. Let's stay home. Whatever. Do you know,

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Speaker 1: is there a risk that happens here? Does the recovery stall?

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Speaker 3: I have absolutely, uncertainty is not great for decision making,

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Speaker 3: That's always the case, and of course we've already got

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Speaker 3: an election this year. We were wondering if that uncertainty

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Speaker 3: could impact and the uncertainty about the global growth outlook

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Speaker 3: will be weighing on the minds of exporters for sure,

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Speaker 3: and cost inflation potentially as Well've obviously got a lot

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Speaker 3: of businesses that are exposed to energy costs. Fertilizer is

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Speaker 3: another one that tends to move pretty closely with oil

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Speaker 3: as well. So yeah, the uncertainty, well, let's hope it's

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Speaker 3: resolved alatively quickly. But right here, right now, it's like

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Speaker 3: it's pretty much at the maximum in terms of whether

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Speaker 3: we're looking at a short or a long term disruption

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Speaker 3: to oil markets here.

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Speaker 1: And yet you sound quite relaxed to me. Is that

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Speaker 1: because is Sharon? Is that because you're doing your best

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Speaker 1: to sound relaxed or do you think do you think

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Speaker 1: there's an equal chance Actually this could up in a

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Speaker 1: week or two and everything's back to normal.

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Speaker 3: It's not looking that way, is it, But it is

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Speaker 3: looking a lot better than it was twelve hours ago

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Speaker 3: in terms of the market prices, but who knows where

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Speaker 3: it to look like twelve hours from now. But I

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Speaker 3: do think that central banks at least will be keen

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Speaker 3: to not panic and not do anything rare in terms

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Speaker 3: of rushing to raise interest rates because it's inflationary for example,

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Speaker 3: because it is also bad for growth, and so the

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Speaker 3: trade off and the choices are quite stark for central

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Speaker 3: banks in terms of how they should respond to it.

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Speaker 3: Our own central bank express confidence and inflation that looks

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Speaker 3: in Febry. I'm sure they're feeling less confident now, just

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Speaker 3: because oil is such an important input into all sorts

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Speaker 3: of costs and prices. But as long as inflation expectations

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Speaker 3: remain well anchored and they can tolerate a bit of

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Speaker 3: noise in the near term, rather than feel they need

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Speaker 3: to deliberately head the recovery off in order to make

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Speaker 3: sure inflations back at two percent quickly. That's not how

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Speaker 3: these things work. But if it's a very long sustained shock,

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Speaker 3: then there will be more difficult to look through those

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Speaker 3: inflationary impacts, and then it could get a bit ugly.

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Speaker 1: Sharon, thank you. Sharon's on the A and Z Chief Economists.

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Speaker 2: For more from Early Edition with Ryan Bridge.

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