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Speaker 1: Hey, listen, Tomorrow, big day. We're going to find out

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Speaker 1: whether inflation is officially back in the target band. It

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Speaker 1: peaked obviously seven point three percent mid twenty two, down

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Speaker 1: to three point three percent in the last quarter. Paul

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Speaker 1: blocks them as hspc's chief economist, and with us now Paul, Hello, Hello,

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Speaker 1: you sitting with a consensus two point two two point three.

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Speaker 2: Percent two point one. Yeah, we're we're down there. We

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Speaker 2: think that it's going to be quite a low number.

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Speaker 2: It's going to fall quite a long way. And yes,

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Speaker 2: of course back in the target band and not too

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Speaker 2: far off the center of the target band, which is

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Speaker 2: all pretty good news really, And obviously part of that

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Speaker 2: good news has already been reflected in the fact that

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Speaker 2: the RBNZ has already delivered seventy five basis points of

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Speaker 2: easing twenty five and then the super sized move we

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Speaker 2: got from them last week. In terms of that fifty

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Speaker 2: basis point move, we think that probably, given if that happens,

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Speaker 2: and if that's the pace of disinflation that's happening in

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Speaker 2: the economy, that the RBNZ will probably easily deliver a

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Speaker 2: large move again in November before Christmas. So we think

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Speaker 2: another fifty basis point move. That's what we're factoring in.

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Speaker 2: Inflation is coming down because of course the New Zealand

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Speaker 2: economy has been a very weak You've had an extended

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Speaker 2: period of weakness in the economy for almost were basically

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Speaker 2: two years, and so that has disinflated the economy. And

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Speaker 2: now the Arbenz can focus on trying to pump prime

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Speaker 2: growth by lowering interest rates, and that's that's that's the

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Speaker 2: New Zealand story, Paul.

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Speaker 1: There are already calls for even bigger than fifty basis points,

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Speaker 1: seventy five basis points. Is that is that possible?

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Speaker 2: It's possible. It's certainly the case that given there's such

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Speaker 2: a large gap between the November meeting and the February

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Speaker 2: meeting next year, you know, it's a really long period

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Speaker 2: of time. And given that it's pretty clear that the

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Speaker 2: economy is weak, the labor markets loosening, that inflation's coming down,

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Speaker 2: that the arbyen Z could deliver further more, even more

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Speaker 2: support than that. So it'll depend a little bit on

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Speaker 2: what that print looks like tomorrow, partly the composition of

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Speaker 2: it as well. So inflation's coming down, most of this

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Speaker 2: inflation we've seen so far has been goods prices coming down,

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Speaker 2: and there's still been this residual stickiness in services inflation,

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Speaker 2: and so one of the key questions will be how

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Speaker 2: much is services inflation still holding up, how much is

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Speaker 2: it domestic inflation still a little bit sticky, and that'll

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Speaker 2: be a factor in the RBNS and thinking no doubt,

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Speaker 2: and then of course looking at the sort of timely

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Speaker 2: indicators of what happens in the jobs market, which they'll

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Speaker 2: get another print of before we get to the November

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Speaker 2: meeting and some on. So, yes, it is possible. Not

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Speaker 2: what we're thinking is the central case, but what we

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Speaker 2: should all think is there are moll rate cuts that

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Speaker 2: are coming soon. Paul.

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Speaker 1: Is there a justification potentially, because as you point out,

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Speaker 1: I mean, it is a massive gap between the end

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Speaker 1: of November and when they come back in the new year.

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Speaker 1: Is there a justification for actually perhaps prudently scheduling a

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Speaker 1: few extra meetings and saying, look, it's unorthodox, but we're

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Speaker 1: going to put a few in there because we may

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Speaker 1: need to move even faster.

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Speaker 2: Well, I mean, you can make the case that they

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Speaker 2: could meet a bit more frequently. The RBA, for example,

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Speaker 2: used to meet eleven times a year, and actually recently

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Speaker 2: because of its review over here in Australia shifted the

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Speaker 2: other way. They've gone from meeting eleven times a year

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Speaker 2: to now they're going to be meeting eight times a year.

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Speaker 2: They're doing that now. So the general sort of trend

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Speaker 2: across the world if you look at the major central banks,

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Speaker 2: the key central banks in the developed economies, is to

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Speaker 2: meet about eight times a year.

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Speaker 1: I mean, what I'm saying with them, it's absolutely fine

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Speaker 1: in normal times, right when you're not in war times,

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Speaker 1: to kind of maybe leave it at eleven or leave

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Speaker 1: it at day or whatever. But the New Zealand economy

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Speaker 1: is clearly in quite a bloody pickle where we are

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Speaker 1: talking about fifty to seventy five basis point cuts in

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Speaker 1: which case should they not be on a war footing

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Speaker 1: and saying because of the difficulty the economy is facing,

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Speaker 1: we are going to the summer meet more frequently because

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Speaker 1: we're in trouble.

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Speaker 2: Well, that's for the RBNZ to assess. They could decided

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Speaker 2: they wanted to have an extra meeting if they wanted

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Speaker 2: to the question the balancing act there is, is it

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Speaker 2: better to call some sort of additional meeting because you

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Speaker 2: are and therefore you would be conveying that you are

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Speaker 2: really very very concerned about the economy. Or is it

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Speaker 2: better to stick to the original schedule and move in

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Speaker 2: larger increments if you feel like you need to exactly

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Speaker 2: keep and feel and move in larger increments if you

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Speaker 2: actually feel like you need to deliver more support. So

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Speaker 2: I think as a working assumption, as a sort of

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Speaker 2: best assessment of what's likely to happen, I think they're

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Speaker 2: more likely to move, you know, faster they if they

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Speaker 2: feel like they need to.

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Speaker 1: Yeah, interesting stuff at very interesting times. Paul, Thank you

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Speaker 1: so much. Appreciate it. Paul Bloxham, agspc's chief economists.

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