WEBVTT - What stubborn inflation could mean for your mortgage this year 0:00:05.519 --> 0:00:05.920 Kyota. 0:00:06.000 --> 0:00:09.079 I'm Chelsea Daniels and this is the Front Page, a 0:00:09.200 --> 0:00:16.480 daily podcast presented by the New Zealand Herald. The Reserve 0:00:16.560 --> 0:00:20.280 Bank has revealed the annual inflation rate for twenty twenty 0:00:20.280 --> 0:00:24.759 five was three point one percent. It puts the inflation 0:00:24.920 --> 0:00:29.600 rate outside the Bank's target band of one to three percent. 0:00:30.160 --> 0:00:33.760 While it slowed significantly since the most recent peak of 0:00:33.880 --> 0:00:36.880 seven point three percent in the June quarter of twenty 0:00:36.960 --> 0:00:42.160 twenty two, it has risen every quarter since December twenty 0:00:42.200 --> 0:00:46.000 twenty four. And while economists expect it to sit around 0:00:46.040 --> 0:00:49.839 three to three point one, the Reserve Bank's November prediction 0:00:50.159 --> 0:00:53.360 had it at two point seven. But what does that 0:00:53.400 --> 0:00:57.160 all actually mean? And our dreams of a quick fix 0:00:57.200 --> 0:01:00.200 in twenty twenty six in the Rearview Mirror to Day 0:01:00.240 --> 0:01:03.360 on the front page and Zaid Harold, Business Editor at Large, 0:01:03.400 --> 0:01:05.800 Liam Dan Is with us to break it all down. 0:01:09.200 --> 0:01:12.240 First off, Liam, was this a surprise at all? 0:01:12.600 --> 0:01:17.319 Well, it was slightly worse than the expectations, But the 0:01:17.360 --> 0:01:22.280 economists have been picking mostly a three percent figure, and 0:01:22.319 --> 0:01:26.199 I think one of the economists at ASB had said 0:01:26.319 --> 0:01:29.240 three point one percent, so they got it right. We 0:01:29.319 --> 0:01:31.720 knew it was going to be at the upper end, 0:01:31.800 --> 0:01:32.920 which is not great. 0:01:32.959 --> 0:01:36.640 Obviously, I saw the Reserve banks November prediction had it 0:01:36.680 --> 0:01:40.080 at about two point seven. Were they just being overly optimistic? 0:01:40.560 --> 0:01:43.240 I guess a little bit. But you know, the tough 0:01:43.280 --> 0:01:46.399 thing for the Reserve Bank is that they only make 0:01:46.480 --> 0:01:51.200 forecasts at these sets points in time. You see the 0:01:51.240 --> 0:01:54.800 bank economists will kind of shift their outlook and they're 0:01:54.840 --> 0:01:56.680 sort of picking it a week before it happened, so 0:01:56.680 --> 0:01:59.640 they've seen what's happened to a whole bunch of other 0:01:59.680 --> 0:02:04.640 prices on a monthly basis. Yeah, I mean it's fair 0:02:04.680 --> 0:02:07.880 to say that its inflation is basically being more stubborn 0:02:08.560 --> 0:02:11.600 and more sort of annoying than the Reserve Bank would 0:02:11.600 --> 0:02:13.639 have hoped, and it's gonna be a little bit of 0:02:13.639 --> 0:02:17.760 a problem for the economic recovery in the year ahead. 0:02:17.800 --> 0:02:21.640 I guess what were the main drivers of this increase? 0:02:22.240 --> 0:02:25.120 Yeah, well, if you look at it across the whole year, 0:02:25.440 --> 0:02:28.239 so the whole year giving us the three point one figure. 0:02:29.160 --> 0:02:32.240 The big contributors are still those things that we were 0:02:32.280 --> 0:02:35.880 complaining about last year, what they call household utilities, but 0:02:36.000 --> 0:02:39.359 it's power and rates were the big ones. Big energy 0:02:40.160 --> 0:02:44.320 price rises and rate rises for that December quarter, for 0:02:44.360 --> 0:02:47.680 those three months that we've just had, there was some 0:02:48.520 --> 0:02:52.600 big increases and things like international airfares, which you know, 0:02:53.280 --> 0:02:55.919 a pretty narrow thing, like you either traveled or you didn't, 0:02:56.200 --> 0:02:59.680 so that's kind of a volatile figure. There was some 0:02:59.720 --> 0:03:03.040 increase and petrol prices, that's a volatile figure. And the 0:03:03.080 --> 0:03:05.520 Reserve Bank is allowed to look through some of those 0:03:05.840 --> 0:03:08.639 volatile figures and focus on what it calls core inflation, 0:03:09.000 --> 0:03:13.320 the more solid, steady, steady numbers. But even there, there 0:03:13.360 --> 0:03:17.280 are some signs that they are staying more prices are 0:03:17.280 --> 0:03:19.040 staying more elevated than they'd like to see. 0:03:19.320 --> 0:03:22.000 What does all of this mean for interest rates? 0:03:22.400 --> 0:03:27.080 Basically means that it's more likely, well it's certain that 0:03:27.880 --> 0:03:30.359 they're not going to be cutting interest rates with inflation 0:03:30.520 --> 0:03:34.680 up at these levels, and depending on what happens next, 0:03:34.760 --> 0:03:38.480 but you know, it looks increasingly like we'll see interest 0:03:38.560 --> 0:03:43.560 rates rising this year. So markets are already sort of 0:03:43.880 --> 0:03:48.680 quite aggressively pricing in a rate hike by September and 0:03:48.720 --> 0:03:50.720 by the end and saying that there'll be two hikes 0:03:50.720 --> 0:03:53.240 by the end of the year. They were pricing it 0:03:53.280 --> 0:03:55.280 in before today's number so I could guess, I guess 0:03:55.280 --> 0:03:59.960 you could say there isn't too much surprise for them there. 0:04:00.000 --> 0:04:02.120 Economists have been a bit more cautious, but they're starting 0:04:02.160 --> 0:04:05.400 to move their forecasts and they're sort of saying, well, 0:04:05.480 --> 0:04:09.640 we think we'll see at least one rate rise this year. 0:04:09.760 --> 0:04:11.600 So you know, it's something for people to think about 0:04:11.640 --> 0:04:14.120 when they're looking at their fixed terms over the next 0:04:14.760 --> 0:04:19.039 few months, that you know, it's kind of this as 0:04:19.040 --> 0:04:21.479 good as it gets in terms of lower insustrates, and 0:04:22.120 --> 0:04:24.000 you've got to be careful. You blink and you might 0:04:24.040 --> 0:04:25.400 miss it there on their way up again. 0:04:26.520 --> 0:04:29.839 Well, usually slow and steady wins the race by it, right, 0:04:29.920 --> 0:04:34.320 but we're going slow and steady in terms of rises 0:04:34.720 --> 0:04:38.800 in inflation. What is it going to? What is going 0:04:38.839 --> 0:04:40.960 to be the secret source? Do you think to actually 0:04:40.960 --> 0:04:43.960 get this under control and within that one to three 0:04:44.080 --> 0:04:45.560 band that we're hoping for. 0:04:46.760 --> 0:04:49.880 Yeah, it's a difficult thing because you know, and it's 0:04:49.920 --> 0:04:51.919 been talked about a lot and all this stuff like 0:04:51.960 --> 0:04:55.560 productivity and all the structural problems with the economy, but 0:04:56.400 --> 0:04:59.880 our economy doesn't have a lot of capacity to grow 0:05:00.120 --> 0:05:03.599 very fast before inflation becomes a problem. Again. So there 0:05:03.600 --> 0:05:06.080 were hopes that you know, one of the only upsides 0:05:06.120 --> 0:05:11.360 really from an economic downturn or recession is that prices 0:05:11.400 --> 0:05:13.920 come down and businesses can't afford to put prices up 0:05:14.040 --> 0:05:18.359 or they discount, and so that domestic inflation that you know, 0:05:18.400 --> 0:05:20.760 the price we pay for services in the economy and 0:05:21.680 --> 0:05:24.200 you know, tradees and all that sort of thing that 0:05:24.240 --> 0:05:28.719 comes down. That's non tradable inflation. And it has come down, 0:05:28.720 --> 0:05:32.760 but it's coming down much slower than the economists and 0:05:32.760 --> 0:05:35.200 the Reserve Bank had thought it would, and there's a 0:05:35.320 --> 0:05:38.679 risk that it doesn't have much further to fall because 0:05:39.360 --> 0:05:42.880 as the recovery takes hold, things start picking up again. 0:05:42.960 --> 0:05:45.840 So you know, if that stays where it is, then 0:05:45.880 --> 0:05:48.919 you start having to look at international prices, which we 0:05:48.960 --> 0:05:52.040 don't have any control over, and that's you know, we're 0:05:52.040 --> 0:05:56.240 at risk of all this geopolitical craziness affecting things. Oil 0:05:56.279 --> 0:05:58.680 prices go up or down depending on what's happening in 0:05:58.680 --> 0:06:02.080 the Middle East or what Donald Trump saying. So things 0:06:02.120 --> 0:06:06.920 like oil prices and global commodity prices. You know, it's 0:06:06.920 --> 0:06:08.800 a good it's a good news story for New Zealand 0:06:08.800 --> 0:06:11.839 that beef prices and dairy prices are so strong the 0:06:11.880 --> 0:06:17.080 export dollars are coming in, but that's keeping sort of food. 0:06:17.200 --> 0:06:19.960 You know, the grocery bills high for New Zealanders, especially 0:06:20.279 --> 0:06:24.640 around things like yeah, dairy and meat are still elevated. 0:06:24.720 --> 0:06:29.400 So you know, if commodity prices around the world stay high, 0:06:29.600 --> 0:06:32.839 then you know, there's not much we can do. Really that. 0:06:32.920 --> 0:06:35.719 The mechanism for dealing with it is putting the interest 0:06:35.800 --> 0:06:39.040 rate up, and that unfortunately slows the economy. So it's like, 0:06:39.120 --> 0:06:43.279 how much recovery can we actually sustain before we have 0:06:43.360 --> 0:06:45.359 to sort of put a lid on it. And the 0:06:45.400 --> 0:06:49.680 only way to solve solve that is with real structural change, 0:06:49.680 --> 0:06:54.599 you know, making the economy more efficient and probably leaner 0:06:54.640 --> 0:06:58.360 and meaner. And the government you know, is aware of that. 0:06:58.440 --> 0:07:01.760 I heard Christopa Luxeen talking about that in the State 0:07:01.760 --> 0:07:04.520 of the Nation speech. You know, they sort of talk 0:07:04.520 --> 0:07:07.800 about it in terms of having done the sort of 0:07:08.040 --> 0:07:10.520 patch up job on the economy, the first aid that's 0:07:10.560 --> 0:07:13.720 required on the patient to get it into recovery, and 0:07:13.800 --> 0:07:16.760 now they're starting to look at sort of structural things 0:07:16.760 --> 0:07:19.640 for the future, like adjusting KEW saver to have New 0:07:19.720 --> 0:07:22.040 Zealand is saving more money and all that sort of stuff, 0:07:22.320 --> 0:07:25.160 but that takes time, you know, you know, so just 0:07:25.240 --> 0:07:30.240 relying on this this turn of the economic cycle to 0:07:30.360 --> 0:07:32.480 sort of isn't going to be enough for New Zealand 0:07:32.480 --> 0:07:34.600 to actually get rich. It's just going to provide a 0:07:34.600 --> 0:07:36.160 bit of a stable platform, I think. 0:07:42.760 --> 0:07:44.680 But to all of you, can I say welcome to 0:07:44.760 --> 0:07:48.280 twenty twenty six. It's going to be a truly great year. 0:07:48.840 --> 0:07:51.640 The economy is growing, the kids are almost back at 0:07:51.640 --> 0:07:55.240 school again, and after a great Kiwi summer break, and 0:07:55.360 --> 0:07:57.320 just like Kew's up and down the country, I can 0:07:57.360 --> 0:07:59.840 tell you the National Party is nothing down and getting 0:08:00.200 --> 0:08:03.480 to work. And I guess I have one very very 0:08:03.520 --> 0:08:06.840 simple message for you today, and that is that National 0:08:07.000 --> 0:08:09.720 is fixing the basics and building the future. 0:08:12.040 --> 0:08:14.640 I noticed that in Christopher Luxen's State of the Nation's 0:08:14.640 --> 0:08:17.720 speech as well. It was very much a control what 0:08:17.920 --> 0:08:24.000 you can control narrative, very optimistic but disciplined, realistic, responsible. 0:08:24.160 --> 0:08:26.440 But on the other end, you know, Hipkin said that 0:08:26.520 --> 0:08:30.080 it's all a bunch of mumbo jumbo management speech. But 0:08:30.200 --> 0:08:33.600 in terms of something like this, I think that they're 0:08:33.600 --> 0:08:37.040 going to go out swinging and say, look, with National 0:08:37.160 --> 0:08:41.320 the economy is going to be in safe, mature hands. 0:08:41.960 --> 0:08:43.960 And he's already kind of said, look, there's not going 0:08:44.000 --> 0:08:47.440 to be any smoking gun election promises that cost a 0:08:47.440 --> 0:08:51.840 lot of money. How do you think that will relate 0:08:51.880 --> 0:08:53.680 to what the economy needs at the moment. 0:08:53.920 --> 0:08:56.920 Yeah, I mean, there isn't really time. If they were 0:08:56.920 --> 0:08:59.000 going to do more radical stuff, they needed to do 0:08:59.040 --> 0:09:01.960 more radical stuff in that first year or so if 0:09:01.960 --> 0:09:04.320 they wanted to. So so anything more radical in terms 0:09:04.320 --> 0:09:07.880 of structural changes is going to be really just have 0:09:08.000 --> 0:09:10.800 to be on the policy promises for the next you know, 0:09:11.040 --> 0:09:14.480 the campaign and for the next term. I think they're 0:09:15.040 --> 0:09:18.280 effectively trying to simplify their message. I think they're talking 0:09:18.320 --> 0:09:21.959 about doing the basics and building for the future or 0:09:22.000 --> 0:09:24.280 something like that is the new mantra he's kind of 0:09:24.280 --> 0:09:26.880 picked up. Luxon has picked up on the idea that, look, 0:09:27.720 --> 0:09:29.800 this recovery isn't going to be good enough to solve 0:09:29.800 --> 0:09:32.720 all New Zealand's problems, but it could be a window 0:09:32.760 --> 0:09:37.560 of economic stability and we've got to seize that moment 0:09:37.640 --> 0:09:40.920 to sort of make these changes. And I guess that's 0:09:40.960 --> 0:09:43.600 what they'll be campaigning on. But you know that there 0:09:43.640 --> 0:09:46.440 is those couple of elephants in the room for the 0:09:46.440 --> 0:09:51.079 Prime Minister. One is Donald Trump and the craziness of 0:09:51.120 --> 0:09:53.640 what can happen in the world, because as we saw 0:09:53.760 --> 0:09:58.240 Tariff's last year, that can really derail things for New Zealand. 0:09:58.480 --> 0:10:02.040 I suppose the other one is more on the local front, 0:10:02.040 --> 0:10:05.560 his own coalition partners. In order to win an election. 0:10:05.679 --> 0:10:09.120 Looking at current polling, he's very much needs Winston Peters, 0:10:09.120 --> 0:10:12.480 who's saying he's not voting for an India free trade deal. 0:10:13.559 --> 0:10:16.319 He's going to be opposed to some of National's other 0:10:16.400 --> 0:10:22.160 ideas like looking at selling any state assets so and 0:10:22.240 --> 0:10:24.920 raising the retirement age, so some of the structural things 0:10:25.000 --> 0:10:27.080 National wants to do. It's got a bit of a 0:10:27.080 --> 0:10:29.360 problem there with its coalition partner as well. I think 0:10:29.400 --> 0:10:34.439 so difficult position. I think that's you know why the 0:10:35.360 --> 0:10:37.480 National and the Prime Minister have sort of tried to 0:10:37.559 --> 0:10:40.760 narrow their focus and their mantra. And it's from that 0:10:40.800 --> 0:10:47.160 sort of keep it a simple, stupid school of political marketing, 0:10:47.200 --> 0:10:50.080 which is just keep hammering this message. You know, we're 0:10:50.080 --> 0:10:53.640 fixing the basics and we're slowly and steadily looking at 0:10:53.720 --> 0:10:56.240 stuff for the future. But they're not going to be 0:10:56.640 --> 0:11:00.600 really in a position to deal with that inflation problem 0:11:00.800 --> 0:11:04.160 and the interest rates and the cap on growth this year. 0:11:04.240 --> 0:11:07.640 So while you know, people talked about maybe picking November 0:11:07.679 --> 0:11:09.960 seven was a chance for the economy to keep growing 0:11:11.120 --> 0:11:13.679 and build up some momentum, and that would be good 0:11:13.720 --> 0:11:15.960 for the government, there's also that risk that you get 0:11:16.000 --> 0:11:18.600 your first interest rate rise before the election, which is 0:11:18.640 --> 0:11:23.440 effectively a signal to voters that you know, that's sort 0:11:23.440 --> 0:11:24.480 of as good as it gets. 0:11:24.920 --> 0:11:28.200 People will be listening, are watching this podcast and saying, well, 0:11:28.520 --> 0:11:31.720 three point one percent, Okay, it's outside of the one 0:11:31.800 --> 0:11:34.920 to three percent bracket. I get that, but what does 0:11:34.960 --> 0:11:37.760 that actually mean for their back pocket? 0:11:38.000 --> 0:11:39.720 Yeah? Well, as I mentioned, you know, if you if 0:11:39.760 --> 0:11:42.720 you're not if you weren't taking an international doing an 0:11:42.720 --> 0:11:46.199 international trip, or going on holiday overseas in that fourth quarter, 0:11:46.240 --> 0:11:49.559 then you know you didn't sort of that that didn't 0:11:49.559 --> 0:11:52.320 affect you. Petrol prices were up a bit, but they'll 0:11:52.360 --> 0:11:54.400 be down again. You know, we can see it with 0:11:54.440 --> 0:11:57.320 the well it's happened already this year and oil prices 0:11:57.400 --> 0:11:59.959 coming off, so that stuff moves around. So there is 0:12:00.000 --> 0:12:04.240 serve bankle look through some of that volatility and it'll 0:12:04.240 --> 0:12:07.080 have a core inflation measure, which will still be inside 0:12:07.480 --> 0:12:10.640 the one to three percent band, and that means that 0:12:10.720 --> 0:12:13.800 they probably won't be rushing to put the interest right up. 0:12:13.840 --> 0:12:17.360 So you know, that's why that you're unlikely to see 0:12:17.360 --> 0:12:19.360 any move or you almost certainly won't see any move 0:12:19.360 --> 0:12:24.000 when they make their first call in February, and economists 0:12:24.000 --> 0:12:26.360 are saying we'll probably no moves in the first half 0:12:26.400 --> 0:12:29.720 of the year. But you know, it just does mean 0:12:29.720 --> 0:12:33.800 that those hikes are coming. It also means really that 0:12:34.679 --> 0:12:36.600 I don't think the cost of living, the idea that 0:12:36.600 --> 0:12:38.839 there's a cost of living crisis and things isn't really 0:12:38.920 --> 0:12:40.679 going to go away for a lot of New Zealanders. 0:12:40.679 --> 0:12:44.480 So I think it's you know, it's there's going to 0:12:44.520 --> 0:12:46.600 be a lot of good economic data as we start 0:12:46.640 --> 0:12:48.920 to get back into growth. We're going to have figures 0:12:48.960 --> 0:12:53.240 about manufacturing and you know, a lot of stuff's going 0:12:53.280 --> 0:12:55.600 to look like it's improving. Hopefully that will flow through 0:12:55.640 --> 0:12:59.959 to the jobs market and we'll see the unemployment rate 0:13:00.160 --> 0:13:03.560 sort of peak and come down, and then you start 0:13:03.559 --> 0:13:07.640 to see labor you know, prices like wages start to 0:13:07.640 --> 0:13:09.000 go up at that point, which is sort of a 0:13:09.040 --> 0:13:11.000 good thing. But then all of a sudden we hit 0:13:11.040 --> 0:13:15.000 the capacity and they start contributing to inflation. So, you know, 0:13:15.080 --> 0:13:18.679 and really the only way that most New Zealanders will 0:13:18.679 --> 0:13:20.960 feel better off is when their wages start to get 0:13:21.000 --> 0:13:24.400 ahead of the inflation rate. And that just doesn't look 0:13:24.440 --> 0:13:27.200 like it's going to happen particularly soon. 0:13:33.160 --> 0:13:36.240 This time last year, Christopher Luckxen confidently predicted that the 0:13:36.280 --> 0:13:40.040 economy was in recovery, unemployment had peaked, and that things 0:13:40.040 --> 0:13:42.560 were going to get better. Since then, we saw the 0:13:42.600 --> 0:13:46.680 economy shrink, more people lose their jobs, the government's finances 0:13:46.720 --> 0:13:50.520 deteriorate further, and the economic going get even harder for 0:13:50.640 --> 0:13:54.200 New Zealand families. Christopher Luxean is out of touch with 0:13:54.280 --> 0:13:57.920 New Zealanders. Holding on to the very very last possible 0:13:58.000 --> 0:14:01.000 date he could have called the election shows how desper pretty. 0:14:03.040 --> 0:14:06.120 I just want to know, Liam, how much of my 0:14:06.200 --> 0:14:08.800 eggs and cheese and milk going to cost within the 0:14:08.920 --> 0:14:14.000 next market? Is that what inflation effects? Yeah? 0:14:14.080 --> 0:14:18.480 I think groceries and power prices and maybe rates are 0:14:18.520 --> 0:14:22.800 some of the things that you know, everybody's everybody's dealing with. Certainly, 0:14:22.840 --> 0:14:29.400 certainly groceries and power prices. Look, dairy prices have have 0:14:29.520 --> 0:14:33.360 come off a bit internationally stabilized. I think we could 0:14:33.360 --> 0:14:37.640 see butter and some other dairy things that the supermarket 0:14:37.680 --> 0:14:40.360 come down a little bit, but not that much more. Unfortunately, 0:14:41.320 --> 0:14:44.400 beef is still going great guns. There's just there's this 0:14:44.520 --> 0:14:46.920 enormous demand for protein around the world, which is good 0:14:46.920 --> 0:14:49.960 for New Zealand in terms of you know, the export prices, 0:14:50.760 --> 0:14:54.280 all the weird you know stuff you see online with 0:14:54.400 --> 0:14:58.760 the you know, workout bros and everything, and and and 0:14:58.560 --> 0:15:02.040 and just consuming all this protein and protein being added 0:15:02.080 --> 0:15:04.240 to everything is actually is. 0:15:04.240 --> 0:15:06.120 That your twenty twenty six goal lam? 0:15:06.840 --> 0:15:12.480 Yeah, now a Jim Bro more protein a little bit, 0:15:12.560 --> 0:15:14.720 but as much as a middle aged old fella can be. 0:15:14.800 --> 0:15:18.680 But you know, but that has driven up demand for protein. So, 0:15:19.880 --> 0:15:24.440 you know, beef lamb are record levels, dairy has been 0:15:24.440 --> 0:15:27.600 at record levels. It's come off a bit, but you know, 0:15:27.720 --> 0:15:30.520 so there's not a lot of relief coming there other 0:15:30.560 --> 0:15:33.520 than that that you know, will that money is flying 0:15:33.520 --> 0:15:37.200 into the economy and so it sort of swings and roundabouts. 0:15:37.560 --> 0:15:42.160 You'd hope that domestic inflation had come down, but you know, 0:15:42.800 --> 0:15:44.880 if things pick up, it may be that we're in 0:15:45.320 --> 0:15:50.560 an era of slightly elevated inflation. Which means that you know, 0:15:50.640 --> 0:15:52.800 the Reserve Bank ultimately will have to act. 0:15:53.520 --> 0:15:56.720 And what will the reserve bank do? What can can 0:15:56.760 --> 0:15:57.080 it do? 0:15:57.600 --> 0:16:00.240 Yeah, it really is just that monetary policy leader be 0:16:00.560 --> 0:16:04.560 very unpopular if they start lifting rates already. But when 0:16:04.960 --> 0:16:08.600 if inflation stays outside that target van for an extended period, 0:16:08.840 --> 0:16:10.880 that's their mandate. They have to do that. You know, 0:16:10.920 --> 0:16:14.920 they're legally required and they're only required to look at inflation, 0:16:15.040 --> 0:16:17.960 you know, so unemployment is considered, but it's no longer 0:16:18.000 --> 0:16:22.000 part of the mandate. They have a single mandate, which 0:16:22.040 --> 0:16:26.000 means that you know, even if unemployment hasn't really come 0:16:26.040 --> 0:16:28.840 down that much and the jobs market hasn't improved that much, 0:16:29.160 --> 0:16:34.080 we could see interest rates rising, you know, before we 0:16:34.120 --> 0:16:36.200 see the real results there, and that that would be 0:16:36.240 --> 0:16:39.080 a shame. That just that just shows you how much 0:16:39.120 --> 0:16:43.440 inflation can curtail a recovery and really just highlights again 0:16:43.600 --> 0:16:46.720 that it's you know, you hear economists talk about capacity 0:16:46.760 --> 0:16:49.520 in the economy and what the capacity is for the economy. 0:16:49.560 --> 0:16:51.400 I like the term speed limit, and I've heard other 0:16:51.440 --> 0:16:53.560 economists feel about it in terms of a speed limit. 0:16:54.440 --> 0:16:58.760 You know, our economy has a relatively low speed limit. 0:16:58.760 --> 0:17:02.240 It can only grow at about up two percent or around 0:17:02.320 --> 0:17:06.120 that level before it overheats and inflation comes through. And 0:17:06.880 --> 0:17:11.200 you know, we may be seeing that you know already 0:17:11.359 --> 0:17:15.600 and that two percent isn't quite enough to be transformative 0:17:17.200 --> 0:17:19.919 in terms of wealth creation, the kind of wealth creation 0:17:20.000 --> 0:17:22.320 that the economy needs to get really in the right 0:17:22.359 --> 0:17:25.800 shape and you know, get the treasury coffers into good 0:17:25.840 --> 0:17:28.920 shape and get people's savings up and all that stuff. 0:17:28.960 --> 0:17:31.439 So that's why you'll keep hearing people talk about the 0:17:31.480 --> 0:17:34.600 need for structural change, and I expect you'll hear the 0:17:34.640 --> 0:17:36.280 Prime Minister keep talking about it too. 0:17:36.440 --> 0:17:39.600 And lastly, Liam, I know that we didn't quite thrive 0:17:39.720 --> 0:17:43.120 in twenty twenty five, but do you have a nice 0:17:43.119 --> 0:17:46.040 little catch phrase for twenty twenty six or is it 0:17:46.119 --> 0:17:49.000 just like let's all keep our heads out of the 0:17:49.040 --> 0:17:51.000 water or something for twenty twelve. 0:17:50.840 --> 0:17:53.359 Or well, you know, my analogy is kind of like 0:17:54.640 --> 0:17:56.720 twenty twenty six, there should be some relief, it should 0:17:56.760 --> 0:17:58.680 still feel good. I'm gonna got one that rhymes. But 0:17:58.680 --> 0:18:00.879 if you're talking about heads, it's kind of that idea 0:18:00.920 --> 0:18:03.240 that happiness is banging your head against the wall and 0:18:03.280 --> 0:18:06.919 then stopping. And so because we're no longer banging our 0:18:06.920 --> 0:18:08.960 head against the wall. It will feel better. It's going 0:18:09.000 --> 0:18:11.480 to feel better than last year, and. 0:18:12.040 --> 0:18:13.800 That's you've still got a bit of a bruise. 0:18:14.680 --> 0:18:17.439 Yeah, And it's not going to solve any of our 0:18:18.240 --> 0:18:22.600 more existential problems, you know. So how long that relief 0:18:22.760 --> 0:18:28.600 from things feeling better lasts will really determine, so things 0:18:28.680 --> 0:18:30.600 like how the election goes. So you're going to see 0:18:31.520 --> 0:18:36.080 business and consumer confidence looking good relative to where they were. 0:18:36.400 --> 0:18:41.680 But at some point, if there's a cap on where 0:18:41.680 --> 0:18:44.960 the recovery goes, that relief is going to sort of 0:18:45.840 --> 0:18:48.280 wear out, I guess, and people are going to be thinking, 0:18:48.520 --> 0:18:49.600 is that it. 0:18:49.240 --> 0:18:51.679 So no quick fix for twenty twenty six. 0:18:52.560 --> 0:18:54.359 Yeah, that's a good one. I should have thought of that. 0:18:55.560 --> 0:18:57.040 Thanks for joining us, Liam. 0:18:57.560 --> 0:19:00.320 Cheers, Chelsea. 0:19:01.480 --> 0:19:04.600 That's it for this episode of the Front Page. You 0:19:04.640 --> 0:19:08.400 can read more about today's stories and extensive news coverage 0:19:08.440 --> 0:19:12.080 at enzidherld dot co dot nz. The Front Page is 0:19:12.119 --> 0:19:16.119 hosted and produced by me Chelsea Daniels Kine. Dickie is 0:19:16.160 --> 0:19:20.280 our studio operator, Richard Martin, our producer and editor, and 0:19:20.359 --> 0:19:24.280 our executive producer is Jane Ye. Follow the Front Page 0:19:24.320 --> 0:19:27.720 on the iheartapp or wherever you get your podcasts, and 0:19:27.840 --> 0:19:31.640 join us next time for another look beyond the headlines.