WEBVTT - How the Reserve Bank’s next move could shape economic recovery ahead 0:00:05.480 --> 0:00:05.880 Kielder. 0:00:06.000 --> 0:00:09.119 I'm Chelsea Daniels and this is the Front Page, a 0:00:09.200 --> 0:00:10.920 daily podcast. 0:00:10.480 --> 0:00:12.640 Presented by the New Zealand Herald. 0:00:16.120 --> 0:00:19.760 The Reserve Bank is expected to cut the official cash 0:00:19.880 --> 0:00:23.759 rate today, but how deeply it will cut remains to 0:00:23.800 --> 0:00:27.480 be seen. Markets are pricing in the cut as a certainty, 0:00:27.920 --> 0:00:30.680 but the debate is now on how big. 0:00:30.520 --> 0:00:33.800 It will be. So what could it mean for. 0:00:33.880 --> 0:00:36.159 Mortgage holders and the average Kiwi? 0:00:36.600 --> 0:00:39.560 Today on the Front Page ends at Herald Business Editor 0:00:39.560 --> 0:00:42.480 at Large Liam dan Is with us to dive into 0:00:42.520 --> 0:00:46.640 the Reserve Bank's upcoming decision and what's been happening behind 0:00:46.840 --> 0:00:50.280 closed doors. 0:00:51.240 --> 0:00:54.000 So Liam, the economists are split. 0:00:54.160 --> 0:00:57.680 Should the bank act boldly with a fifty point cut 0:00:57.880 --> 0:01:00.440 or play it safe with the twenty five Oh you. 0:01:00.400 --> 0:01:05.920 Want me to guess? Yeah, well, I guess I'd probably 0:01:06.040 --> 0:01:08.880 lean towards front ending it and going fifty basis points 0:01:08.959 --> 0:01:12.640 get it done. That's an optimistic view on inflation that 0:01:12.720 --> 0:01:15.399 we're not going to suddenly see inflation come back to 0:01:15.680 --> 0:01:20.520 worrying levels. We've had this rough patch with food prices 0:01:20.560 --> 0:01:23.959 and electrisity prices and that has pushed inflation up. And 0:01:24.440 --> 0:01:29.280 so the Reserve Bank has this you know, single mandate 0:01:29.319 --> 0:01:33.720 on inflation now, so the coalition government changed that from 0:01:33.920 --> 0:01:38.160 unemployment inflation to just inflation. So when people look at 0:01:38.160 --> 0:01:40.759 the decisions the Reserve Bank are making, and they look 0:01:40.760 --> 0:01:43.920 at how bad retailer is downtown and all that sort 0:01:43.959 --> 0:01:47.560 of stuff, that's really not what's driving them. 0:01:47.600 --> 0:01:48.320 Their core. 0:01:50.400 --> 0:01:54.800 Driver for all of their decision making is keeping inflation 0:01:54.920 --> 0:01:56.880 between one and three percent, and so if it's starting 0:01:56.880 --> 0:01:59.760 to get up towards three, that's a worry for them. 0:02:00.160 --> 0:02:03.440 It is they believe, because the economy is so flat 0:02:03.480 --> 0:02:05.960 that it must be going to start to ease away again. 0:02:06.480 --> 0:02:09.440 But that would be creating pressure on them to only 0:02:09.520 --> 0:02:12.040 cut by twenty five. So I'd like to see them 0:02:12.040 --> 0:02:14.519 cut by fifty. I'd like to see the economy get 0:02:14.520 --> 0:02:17.240 that sort of a little bit of stimulus that it 0:02:17.280 --> 0:02:21.040 needs to get that recovery rolling. But I think it 0:02:21.200 --> 0:02:25.480 really is finely balanced. They could well be more cautious 0:02:25.520 --> 0:02:27.920 about inflation and go with twenty five. 0:02:28.560 --> 0:02:31.280 What are the risks in holding back? Well, the risk in. 0:02:31.280 --> 0:02:35.320 Holding back is that the downturn is just deeper than 0:02:35.840 --> 0:02:39.200 we thought, So you know, if it gets too if 0:02:39.200 --> 0:02:42.160 an economy just loses too much steam, it's very hard 0:02:42.200 --> 0:02:44.720 to get it rolling again, and some people are arguing 0:02:44.720 --> 0:02:48.880 that we're already there. But you know, we saw this 0:02:49.080 --> 0:02:53.480 big fall in GDP growth in the second quarter. So 0:02:53.520 --> 0:02:55.240 we had a couple of quarters the last quarter of 0:02:55.280 --> 0:02:58.520 last year and the first quarter of this year we 0:02:58.639 --> 0:03:01.280 had growth, and we thought, yeah, the recovery is happening. 0:03:01.360 --> 0:03:02.800 That is what's supposed to happen. 0:03:02.639 --> 0:03:05.360 Thrive for twenty five Yeah, yeah, yeah, finally happening. 0:03:05.520 --> 0:03:07.560 Yeah, And it just absolutely fell off a cliff in 0:03:07.600 --> 0:03:10.680 the second quarter. And some people, including the government, have 0:03:10.760 --> 0:03:15.320 pointed to the US tariff policy is sort of spooking 0:03:15.360 --> 0:03:18.120 everyone or hitting our economy. I don't think it has 0:03:18.200 --> 0:03:21.880 hit our economy that hard. It may have hit confidence, 0:03:21.919 --> 0:03:26.320 but our exporters of our primary products, so dairy, meat, 0:03:27.000 --> 0:03:30.720 horticultural products, are doing so well that tariffs haven't really 0:03:30.720 --> 0:03:33.880 touched the sides, So that hasn't hit the economy directly. 0:03:33.960 --> 0:03:37.520 It may have hit confidence, but I think things like 0:03:37.600 --> 0:03:41.160 the property market, the employment market, it's all just combined 0:03:41.200 --> 0:03:44.280 a huge lack of confidence and it's spilled over a 0:03:44.280 --> 0:03:46.680 bit as far as we can see into the third quarter. 0:03:46.840 --> 0:03:49.360 So while the third quarter might be a bit better, 0:03:49.400 --> 0:03:53.320 there's some signs of life and card spending and people 0:03:53.320 --> 0:03:56.800 getting out and shopping a bit more, it still is 0:03:56.840 --> 0:03:59.200 pretty gloomy and businesses are pretty down or that you know, 0:03:59.320 --> 0:04:03.400 they were right that third quarter, So that will weigh 0:04:03.600 --> 0:04:06.280 on the Reserve Bank too. Even though you know it's 0:04:06.360 --> 0:04:10.320 mandate is inflation, it still considers the wider economy as 0:04:10.440 --> 0:04:15.240 part of that and if anything, how flat and down 0:04:15.320 --> 0:04:20.400 that is, should give them some confidence that inflation won't 0:04:20.680 --> 0:04:23.760 stay and be persistent. Because when an economy is performing 0:04:23.800 --> 0:04:26.840 so badly that they say that, the economists will say 0:04:26.880 --> 0:04:30.680 excess there's excess capacity in the economy, which means that 0:04:31.360 --> 0:04:34.720 it's just not running at full steam. So that is 0:04:34.800 --> 0:04:39.120 kind of disinflationary or deflationary. So it should be putting 0:04:39.120 --> 0:04:43.240 downward pressure on pricing. And so hopefully once we're through 0:04:43.279 --> 0:04:47.799 the you know, the peak of the food price spikes 0:04:47.800 --> 0:04:50.480 we've seen and power prices coming off with more rain 0:04:50.560 --> 0:04:55.320 and things, you know, we'll see inflation either way. 0:04:56.320 --> 0:04:59.120 What impact could a bigger cut, so maybe like a 0:04:59.240 --> 0:05:03.080 point five have for the ordinary mortgage holder for examples, 0:05:03.160 --> 0:05:05.360 and will banks actually pass that on? 0:05:06.120 --> 0:05:08.760 Well, the banks have passed on a little bit and 0:05:09.040 --> 0:05:13.240 ahead of this latest OCR announcement. If it's a fifty 0:05:13.279 --> 0:05:16.720 basis point cut, that just gives them a bit more 0:05:16.800 --> 0:05:19.080 leeway to cut a bit further. Now how far they go, 0:05:19.240 --> 0:05:22.880 it's there's a lot of market conditions involved and competition 0:05:22.960 --> 0:05:25.560 and all that sort of stuff. But what happens is 0:05:26.080 --> 0:05:30.599 with the you know, the interest rates setting, they look 0:05:30.640 --> 0:05:33.279 at what the OCR is predicted to do. The market 0:05:33.839 --> 0:05:39.880 places all these bets about future prices for debt, and 0:05:39.920 --> 0:05:43.640 that kind of can set the parameters for what the 0:05:43.680 --> 0:05:47.000 banks can and can't afford to do with regards to 0:05:47.080 --> 0:05:51.640 cuts or hikes, and so what's priced in is often 0:05:51.680 --> 0:05:54.560 well ahead of the Reserve Bank actually moving itself. So 0:05:55.480 --> 0:05:58.000 if the Reserve Bank just as twenty five basis points, 0:05:58.320 --> 0:06:02.360 probably it's all priced in. If it does fifty, there 0:06:02.440 --> 0:06:04.240 might be a little bit more room to move and 0:06:04.279 --> 0:06:07.839 you might see rates come down. But also important will 0:06:07.839 --> 0:06:10.040 be what the Reserve Bank says about. 0:06:09.760 --> 0:06:10.440 The path ahead. 0:06:10.480 --> 0:06:15.680 Now, there's not much coming with the announcement today. It's 0:06:17.080 --> 0:06:19.719 just a monetary policy review, which just means it's a 0:06:19.760 --> 0:06:23.120 shorter statement. It doesn't have all the forecasts, but the 0:06:23.240 --> 0:06:26.240 tone will matter, and if there's an indication that they 0:06:26.279 --> 0:06:29.680 still see more concern around the slowing economy than they 0:06:29.720 --> 0:06:33.440 do around inflation. That might encourage the banks to pass 0:06:33.480 --> 0:06:35.400 on a bit more in terms of rate cuts for 0:06:35.480 --> 0:06:36.200 the average person. 0:06:36.440 --> 0:06:39.800 How much can you read into the tone of those statements? 0:06:39.880 --> 0:06:41.080 What are you looking out for? 0:06:41.480 --> 0:06:43.960 Well, you can read a lot and I I don't 0:06:43.960 --> 0:06:46.200 know whether it comes to passing it is all true 0:06:46.240 --> 0:06:47.960 and everything, but we do read a lot into it 0:06:48.000 --> 0:06:50.240 because often you've got a one if you've got like 0:06:50.240 --> 0:06:52.400 a sort of a one page statement, you know, it's 0:06:52.400 --> 0:06:55.560 a very finite number of words, and so people are 0:06:55.560 --> 0:06:58.520 looking through to find any change in key words, you know, 0:06:58.600 --> 0:07:02.360 sort of they might sort of see it move from 0:07:02.440 --> 0:07:05.680 for the for some time to for the foreseeable future 0:07:05.800 --> 0:07:07.640 or something as subtle as that, and see that that 0:07:07.800 --> 0:07:11.560 is a change in tone. So, yeah, every word is 0:07:11.600 --> 0:07:15.920 poured over to get a sense of how the Reserve 0:07:15.960 --> 0:07:18.880 Bank is feeling. And it's a weird sort of game, 0:07:18.960 --> 0:07:20.840 Like you wonder, why don't they just come out and 0:07:20.840 --> 0:07:25.680 tell us exactly what they're feeling every time? And I'd 0:07:25.760 --> 0:07:28.119 like to think they could do that a bit more, 0:07:28.640 --> 0:07:31.880 but they also, you know, they're also very keen to 0:07:31.920 --> 0:07:34.200 emphasize that this is only a point in time, and 0:07:34.240 --> 0:07:37.120 their view can change anytime. So if the market's collapsed 0:07:37.440 --> 0:07:40.760 next week, you know everything's changed. So does the. 0:07:40.800 --> 0:07:46.280 Language depend on who's in charge? Though, like a director 0:07:46.320 --> 0:07:48.280 in a movie, you can kind of gauge or the 0:07:48.400 --> 0:07:51.560 ambiguous endings on who's directed a piece or something. 0:07:51.680 --> 0:07:54.920 Yeah, probably a little bit. I mean who's in charge 0:07:54.960 --> 0:07:56.960 as on the Reserve Bank governor has mattered less and 0:07:57.040 --> 0:07:59.200 less in the past few years because we have a 0:07:59.240 --> 0:08:01.600 committee struck sure, and the decision is made by the 0:08:02.160 --> 0:08:08.320 Reserve Bank's Monetary Policy Committee and they only get the 0:08:08.360 --> 0:08:11.400 Reserve Bank Governor involved to vote if it's sort of 0:08:11.920 --> 0:08:16.040 a completely slit decision, if it's a tie. But the 0:08:16.080 --> 0:08:18.880 Reserve Bank governor does tend to set some of the 0:08:18.920 --> 0:08:21.720 culture and the tone. And I'm sure a strong Reserve 0:08:21.760 --> 0:08:25.600 Bank governor like Adrian or was would have influence in 0:08:25.640 --> 0:08:29.280 the meeting and also yeah, in the way that the 0:08:29.280 --> 0:08:32.600 bank communicates, so that that is pretty key. And I 0:08:32.600 --> 0:08:34.440 don't know that we've seen a huge difference in that 0:08:34.480 --> 0:08:37.720 written language. I mean, Adrian Orr and Christian hawksby pretty 0:08:37.720 --> 0:08:41.920 different personalities, not a massive shift in language in the 0:08:42.080 --> 0:08:45.760 in the written takes. But yeah, I think over time 0:08:45.840 --> 0:08:48.120 that that is where the Reserve Bank governor does. 0:08:47.920 --> 0:08:50.120 Influence things the bank is seen. 0:08:50.280 --> 0:08:53.720 Obviously a wave of executive exits. 0:08:53.800 --> 0:08:55.760 Tell me about ores leaving payout. 0:08:56.120 --> 0:08:59.000 Yeah, well, we found out earlier this week that Adrian 0:08:59.160 --> 0:09:02.400 Orr got a restraint of trade payout for about four 0:09:02.480 --> 0:09:07.199 hundred and sixteen thousand dollars, taking his annual pay for 0:09:07.320 --> 0:09:09.080 what was paid for the nine months he was there 0:09:09.160 --> 0:09:10.959 up above a million. Yeah, it was an interesting one. 0:09:11.080 --> 0:09:13.080 It had people scratching their heads a bit because you know, 0:09:13.120 --> 0:09:15.640 there isn't any other Reserve bank governor role in New Zealand. 0:09:16.160 --> 0:09:19.480 Doesn't sort of seem like it would impinge upon the 0:09:21.120 --> 0:09:23.680 Reserve Bank if he was to take a role elsewhere. 0:09:24.000 --> 0:09:26.960 I sort of wondered whether you know that included as 0:09:27.480 --> 0:09:31.280 encompassed a non disclosure agreement as and to not talk 0:09:31.320 --> 0:09:35.160 about it until he had got through that period. I 0:09:35.160 --> 0:09:36.679 don't know how they do that. I mean, it's all 0:09:36.679 --> 0:09:40.080 how the contract's written. My experience with those sort of 0:09:40.120 --> 0:09:43.800 contracts and restraintive trades as they're usually written into a 0:09:43.840 --> 0:09:46.680 contract in advance, and you don't get paid for him 0:09:47.640 --> 0:09:49.640 sticking to it or not. It's there in the contract 0:09:49.640 --> 0:09:50.160 at the beginning. 0:09:50.280 --> 0:09:52.079 Perhaps it might be in the next contract. 0:09:52.280 --> 0:09:55.160 Well, yeah, some interesting questions there for the Reserve Bank, 0:09:55.200 --> 0:09:57.760 which probably won't get answered because you hear the politicians 0:09:57.800 --> 0:09:59.760 and all the you know, everyone says, oh, it's a 0:10:00.360 --> 0:10:02.960 employment matter, so therefore no one's going to talk about it. 0:10:03.000 --> 0:10:06.840 But yeah, it did raise a few eyebrows. 0:10:12.640 --> 0:10:16.040 There are three main areas of responsibility for the Reserve Bank. 0:10:16.760 --> 0:10:22.120 The first is price stability, and we will stay laser 0:10:22.240 --> 0:10:27.000 focused on delivering on low and stable inflation. The second 0:10:27.360 --> 0:10:32.000 is prudential supervision of the financial system that promotes financial 0:10:32.040 --> 0:10:35.720 stability and that is important for healthy and growing economy. 0:10:36.679 --> 0:10:39.560 And third, but not least, it's a safe and efficient 0:10:39.600 --> 0:10:44.400 payments system and that includes issues of notes and coins. 0:10:45.240 --> 0:10:48.080 So a key component to build trust and credibility for 0:10:48.160 --> 0:10:52.839 the Reserve Bank is transparency and openness. 0:10:53.840 --> 0:10:56.640 When is Anna Bremen meant to step into the row 0:10:57.520 --> 0:11:03.040 a new Swedish Reserve Bank governor and starts in December one, so. 0:11:03.760 --> 0:11:07.199 She will probably be inheriting a sort of a clean 0:11:07.400 --> 0:11:10.840 slate in terms of monetary policy. Certainly the staff turnover 0:11:10.960 --> 0:11:12.640 means that there'll be a lot of has been a 0:11:12.679 --> 0:11:16.560 lot of change, but also the current forecasts are that 0:11:17.240 --> 0:11:20.079 we get either our twenty five or fifty basis points 0:11:20.440 --> 0:11:25.439 with this October cut, and then probably another one in November, 0:11:26.440 --> 0:11:29.679 and then after that the Reserve Bank in theory would 0:11:29.679 --> 0:11:33.000 have rates down as low as they need them, economy 0:11:33.000 --> 0:11:35.880 would start moving again and it would be a more 0:11:35.920 --> 0:11:38.280 stable period for the new governor coming in, and so 0:11:38.320 --> 0:11:40.920 there might be a period of do nothing, do nothing, 0:11:40.960 --> 0:11:45.080 do nothing. That'd be ideal, hopefully, hopefully that if things 0:11:45.120 --> 0:11:47.400 go to plan, that's what we'd be hoping for. 0:11:47.720 --> 0:11:51.640 What's going to be her main mandate when she comes in, Well, 0:11:51.720 --> 0:11:54.920 she's already talked, you know, her mandate is inflation. 0:11:55.040 --> 0:11:59.280 So again monetary Policy Committee is deciding which way the 0:11:59.360 --> 0:12:03.720 rate goes. The single mandate is to keep inflation in 0:12:03.800 --> 0:12:07.720 the band. But in her short speech, you know, when 0:12:07.720 --> 0:12:12.280 she was introduced to the public last month, she did 0:12:12.400 --> 0:12:15.480 hit a few key marks that probably land pretty well 0:12:15.480 --> 0:12:18.400 with people who've been critical of the bank and with 0:12:18.440 --> 0:12:23.440 the finance minister. She talked about transparency, which is a 0:12:23.440 --> 0:12:27.080 big deal at the Swedish Reserve Bank. They have a 0:12:27.080 --> 0:12:30.600 policy of publishing all the minutes from their Monetary policy 0:12:30.600 --> 0:12:33.720 committee meetings and letting people know which way everyone voted, 0:12:33.760 --> 0:12:39.160 which we don't do. She talked about, you know, clear 0:12:39.200 --> 0:12:46.160 communication around forecasting, around modeling different scenarios and explaining that 0:12:46.200 --> 0:12:48.120 to the public. Now, you know, to be fair, the 0:12:48.160 --> 0:12:53.440 Reserve Bank has done some modeling. They've also they had 0:12:53.440 --> 0:12:56.920 a bit of an issue with how they're forecasting was 0:12:56.960 --> 0:13:00.360 being interpreted, and they've sort of proactively addressed that. They've 0:13:00.679 --> 0:13:03.160 the chief economist there, Paul Conway's written quite a bit 0:13:04.240 --> 0:13:08.199 about how we should view Reserve Bank forecasts. But still 0:13:08.200 --> 0:13:12.880 I think you know, that focus on you know, communication, 0:13:13.000 --> 0:13:16.120 transparency will be welcome. But she also emphasized very much 0:13:16.200 --> 0:13:18.760 that you know, we've all learned if we didn't know beforehand, 0:13:18.800 --> 0:13:23.959 inflation really really sucks. What we've been through since COVID 0:13:24.160 --> 0:13:27.640 has reminded us of that, and she will stay very, 0:13:27.720 --> 0:13:30.600 very focused on keeping inflation in the right place. 0:13:30.880 --> 0:13:34.440 So as we know, New Zealand's GDP is down, business 0:13:34.480 --> 0:13:38.080 sentiment remains fragile at best. If the mood of the 0:13:38.080 --> 0:13:41.280 boardroom is anything to go by, and the future is 0:13:41.400 --> 0:13:45.079 of course uncertain, how much faith do you have in 0:13:45.120 --> 0:13:48.559 the Bank's ability to steer us back to that growth period. 0:13:49.880 --> 0:13:54.240 Well, I still believe in monetary policy doing the job. 0:13:54.520 --> 0:13:59.520 So in the end, we saw it in COVID, if 0:13:59.559 --> 0:14:03.600 you drop interest rates low enough, you're effectively putting more 0:14:03.600 --> 0:14:06.839 cash into the economy because people aren't having to pay 0:14:07.559 --> 0:14:10.400 those rates to those mortgage rates, so you know, more 0:14:10.440 --> 0:14:14.240 dollars in their pockets, and eventually that gets the economy going. Now, 0:14:14.280 --> 0:14:19.760 it can also overstimulate an economy and create inflation, but 0:14:20.200 --> 0:14:23.040 I think it will work. It's just it is taking 0:14:23.040 --> 0:14:26.000 a lot longer than we are used to to transmit. 0:14:26.080 --> 0:14:30.360 And there's probably a couple of ways of looking at it. 0:14:30.360 --> 0:14:33.840 One is that the economy has just been worse than 0:14:33.880 --> 0:14:36.400 we've expected all the way along, and people when they 0:14:36.400 --> 0:14:39.040 do get a bit of money back from their mortgage, 0:14:39.240 --> 0:14:41.800 that the savings on their mortgage, they're saving that or 0:14:41.840 --> 0:14:45.040 putting it on the mortgage because they're worried about their 0:14:45.400 --> 0:14:48.680 employment or their business. They just want to be secure, 0:14:48.760 --> 0:14:51.680 so they're not going out and spending. And the other 0:14:51.720 --> 0:14:54.560 one is this sort of idea that more people than 0:14:54.800 --> 0:14:57.640 usual are trying to game the thing. So we've had 0:14:57.720 --> 0:15:01.760 higher numbers of people on floating interest rates or very 0:15:01.760 --> 0:15:04.520 short term fixed rates because nobody wants to lock in 0:15:04.560 --> 0:15:07.040 for a long time and actually which would realize the 0:15:07.080 --> 0:15:09.600 savings that the Reserve Bank's trying to give us. But 0:15:10.080 --> 0:15:12.200 people don't want to do that until they sort of 0:15:12.400 --> 0:15:14.520 get to the bottom of the cycle and everybody wants 0:15:14.560 --> 0:15:17.400 to lock in at a lower rate, maybe the end 0:15:17.440 --> 0:15:19.040 of this year, or you know, when we get to 0:15:19.120 --> 0:15:23.040 the low end of this interest rates cycle. Which is 0:15:23.680 --> 0:15:26.600 a nice idea, but it's actually working against what the 0:15:26.640 --> 0:15:29.320 Reserve Bank's trying to achieve. It's keeping people on higher 0:15:29.440 --> 0:15:33.360 rates for longer because they're not taking the lowest available rate. 0:15:33.760 --> 0:15:37.000 When it comes to the economy correcting itself, you would 0:15:37.040 --> 0:15:39.720 have been reporting around two thousand and eight, right, I 0:15:39.760 --> 0:15:43.080 mean how long did the economy and GDP take to 0:15:43.280 --> 0:15:44.560 correct itself after. 0:15:44.320 --> 0:15:47.440 That, Well, it was a bit of a slow train 0:15:47.480 --> 0:15:52.120 wreck the GFC, so it was pretty horrible through two 0:15:52.160 --> 0:15:57.400 thousand and eight, two and nine. I think the government 0:15:57.480 --> 0:16:00.280 books were hit pretty hard because we will we have 0:16:00.320 --> 0:16:02.280 to remember we had an earthquake in twenty eleven, so 0:16:02.320 --> 0:16:05.720 the government books are terrible from that period. But the 0:16:05.800 --> 0:16:10.920 economy itself bounced back quite quickly. We didn't apart from 0:16:11.080 --> 0:16:13.520 the obvious thing of the finance companies that all went over, 0:16:13.680 --> 0:16:17.200 which was very specific. The broader economy wasn't hit so 0:16:17.400 --> 0:16:22.080 badly like our sheer market bounced back reasonably well. We 0:16:22.120 --> 0:16:25.640 did have after the GFC a long period of relatively 0:16:27.160 --> 0:16:31.400 relatively low growth, but it was also really low inflation, 0:16:31.640 --> 0:16:33.680 so it was you know, we were talking about deflation 0:16:33.800 --> 0:16:37.720 and so yet a period where while things weren't booming 0:16:38.120 --> 0:16:41.840 for quite a while, prices weren't going much up much either, 0:16:41.880 --> 0:16:45.440 so things were stable and that was that's important, And 0:16:45.480 --> 0:16:47.840 I think that's kind of what's been lacking for people 0:16:47.880 --> 0:16:50.960 through this period since COVID is just the volatility is 0:16:51.800 --> 0:16:56.200 really plays havoc with your you know, psychology around the economy, 0:16:56.880 --> 0:16:59.480 and that goes to the confidence. And I think there's 0:16:59.560 --> 0:17:02.640 just a lack of confidence in the future at the moment, 0:17:02.640 --> 0:17:04.600 and we need a period of stability. 0:17:04.920 --> 0:17:06.359 Yeah, because that's what I was thinking. 0:17:06.960 --> 0:17:13.040 How long can the government perhaps blame COVID for economic 0:17:13.240 --> 0:17:16.600 woes now in twenty twenty five, Well, I. 0:17:16.560 --> 0:17:19.040 Mean there's there's two ways, two parts to it. So 0:17:19.480 --> 0:17:25.600 if they're talking about the big picture government finances, they 0:17:25.600 --> 0:17:28.280 could they still can be blaming COVID, you know, or 0:17:28.320 --> 0:17:30.640 they can blame the last government. You can take your pick. 0:17:31.000 --> 0:17:32.520 Either they had to do it or they didn't. But 0:17:34.200 --> 0:17:38.560 the government accounts blew out during COVID one way or 0:17:38.600 --> 0:17:42.080 the other, and that's going to take a long time, 0:17:42.160 --> 0:17:46.600 many many years to correct. But then if you focus 0:17:46.640 --> 0:17:51.119 in on the current economic cycle, that's a bit different 0:17:51.200 --> 0:17:54.399 to the big macro stuff. So you know they're linked 0:17:54.440 --> 0:17:58.399 because this government has felt a need to address some 0:17:58.440 --> 0:18:01.600 of that macro stuff at a rate and it believes 0:18:01.600 --> 0:18:03.399 that's the right thing to do. But that is also 0:18:03.520 --> 0:18:09.720 meant it's not it's not actually cutting spending overall, but 0:18:09.800 --> 0:18:12.800 it's not maintaining the increases and spending. It's trying to 0:18:12.840 --> 0:18:16.480 cut back here and there to pay down debt and 0:18:16.520 --> 0:18:20.520 get us into surplus by a certain date. Those are 0:18:20.560 --> 0:18:24.000 political decisions and they've had an impact on the on 0:18:24.160 --> 0:18:30.160 the shorter term economic cycle because you haven't had government 0:18:30.200 --> 0:18:35.320 fiscal stimulus pushing the economy along. So yeah, I don't 0:18:35.359 --> 0:18:38.199 think you can look back much longer at the current 0:18:38.320 --> 0:18:41.840 economic cycle unless you tie it to that that and 0:18:42.119 --> 0:18:45.399 you believe that you know that we must address There 0:18:45.440 --> 0:18:46.720 are a lot of people who believe that that that 0:18:46.920 --> 0:18:49.919 we're in sort of a crisis around the government's levels 0:18:49.920 --> 0:18:53.679 of debt and you know, the deficit and all that 0:18:53.720 --> 0:18:55.760 sort of stuff, and there are other people who are 0:18:55.760 --> 0:18:59.280 more relaxed about it. So yeah, those are political decisions 0:18:59.320 --> 0:19:00.560 I think for joining US. 0:19:00.600 --> 0:19:01.240 Liam cheers. 0:19:01.560 --> 0:19:01.920 All right. 0:19:04.680 --> 0:19:07.919 That's it for this episode of the Front Page. You 0:19:07.960 --> 0:19:11.840 can read more about today's stories and extensive news coverage 0:19:11.880 --> 0:19:15.960 at enzidherld dot co dot nz. The Front Page is 0:19:16.040 --> 0:19:19.439 produced by Jane Ye and Richard Martin, who is also 0:19:19.640 --> 0:19:20.280 our editor. 0:19:20.800 --> 0:19:22.240 I'm Chelsea Daniels. 0:19:22.680 --> 0:19:25.879 Subscribe to the Front Page on iHeartRadio or wherever you 0:19:25.920 --> 0:19:29.600 get your podcasts, and tune in tomorrow for another look 0:19:29.680 --> 0:19:30.840 behind the headlines.