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Speaker 1: Inflation for the December quarter is coming out well at

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Speaker 1: about ten forty five. The Reserve Bank reckons it'll be

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Speaker 1: two point one percent annualized minus an Z. It's the

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Speaker 1: same position basically for all of the major banks. Nick

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Speaker 1: Touughley is asb's chief economics.

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Speaker 2: He's with us this morning. Ni, good morning, Good morning.

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Speaker 2: Tell me what are you picking?

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Speaker 3: We're Mason, I'm boring after what you just said, but

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Speaker 3: we're picking two point one percent, So that means inflation

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Speaker 3: is sitting basically smack bang in the middle of the

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Speaker 3: Reserve banks target.

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Speaker 2: Should we stop caring about inflation?

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Speaker 3: Then? I think the thing is that you always have

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Speaker 3: to care about inflation. I think we've had we had

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Speaker 3: a long period of decades where we got sort of

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Speaker 3: we took love inflation for granted, and we've realized that

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Speaker 3: fation send it away on you if you don't keep

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Speaker 3: an eye on it, and it is quite costly to society.

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Speaker 2: When you got inflation, it's given us a good whipping.

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Speaker 1: But now that it's in the zone, can we you know,

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Speaker 1: can we stop the intense focus and scrutiny.

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Speaker 3: Yeah. I think for most people they'll start getting a

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Speaker 3: bit more relaxed and they'll kind of forget all bit

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Speaker 3: exactly what the inflation inflation rate is. But we do

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Speaker 3: still need to be a bit cautious this year because

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Speaker 3: we do have a situation where the domestic inflation is

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Speaker 3: still relatively high and the Reserve Bank is going to

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Speaker 3: want to see that come down over the course of

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Speaker 3: this year, which is what we're expecting and what we

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Speaker 3: have been seeing. But for inflation to stay around two percent,

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Speaker 3: that domestic part needs to come down because we can't

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Speaker 3: keep relying on outright falls and things like fuel prices

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Speaker 3: and weakness in food prices, for example, to keep things low.

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Speaker 1: That's the stuff like our insurance, our rates, our rents.

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Speaker 1: It's the stuff that's not influenced by international factors. What

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Speaker 1: are you picking will happen with that today?

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Speaker 3: Well, that's been around five percent on an annual basis

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Speaker 3: for expecting somewhere around about four and a half percent.

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Speaker 3: So there you go. That's another half percent down on that,

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Speaker 3: and that's helping offsets, you know, just some rebound in

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Speaker 3: the cost of those sort of more traded goods because

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Speaker 3: they've actually been really wet. But it's done most of

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Speaker 3: the work getting inflation down to a level, But we

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Speaker 3: can't rely on outright declines overall and those sort of goods.

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Speaker 3: So they're going to be lifting a little bit over

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Speaker 3: the course of this year. So we're going to see

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Speaker 3: the mix of inflation change. But what we want to

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Speaker 3: see is our domestic but going back to something a

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Speaker 3: bit more normal, in keeping inflation anchored around two percent.

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Speaker 1: Not relying on oil to bring us down. Nick, what

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Speaker 1: about the ocr February nineteenth is the meeting from the

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Speaker 1: Reserve Bank and everyone saying, oh, it looks like we'll

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Speaker 1: probably have half a percent if you look at the

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Speaker 1: services sector data we had yesterday, the job ads.

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Speaker 2: Data, Should we not be going bigger?

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Speaker 3: I think there Reserve Bank will be comfortable going with fifty.

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Speaker 3: I mean, most of the debates it's been around will

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Speaker 3: they go back to doing twenty five point moves or fifties?

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Speaker 3: And the Reserve Bank basically climbed on top of the

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Speaker 3: sky tower and sort of shouted it's probably going to

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Speaker 3: be fifty guys, and I think that's what they will do.

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Speaker 3: I think going further than that, we're at a point

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Speaker 3: now where the Reserve Bank, beyond February will be starting

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Speaker 3: to think about Okay, how much further do we really

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Speaker 3: need to go? We've done a lot of cuts. We

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Speaker 3: haven't quite seen the full effects of it. Have we

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Speaker 3: done enough in wanting to think more about fine tuning

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Speaker 3: how much it needs to go? So I don't think

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Speaker 3: seventy five. We haven't seen the reserve thing really hit

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Speaker 3: the panic button on the way down to that extreme.

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Speaker 3: They had cut at a fast clip recently, and that's

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Speaker 3: what we're expecting.

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Speaker 2: This month certainly felt slow and steady, hasn't it.

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Speaker 3: Nick?

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Speaker 2: Thank you Nick Tuffley asb's TV economist.

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