1
00:00:00,560 --> 00:00:04,080
Speaker 1: Right, we're getting inflation figures today. Economists of forecasting it

2
00:00:04,080 --> 00:00:07,200
Speaker 1: could fall between two point one to two point three percent,

3
00:00:07,240 --> 00:00:11,039
Speaker 1: which is within the Reserve Banks target range. Nzed Ier.

4
00:00:11,200 --> 00:00:15,320
Speaker 1: Deputy Chief Executive Christina Lung joins me. Now, good morning, Christina.

5
00:00:15,560 --> 00:00:20,200
Speaker 2: Moderna, what's your pick. We forecast CPI to have increase

6
00:00:20,280 --> 00:00:22,960
Speaker 2: point six percent over the final quarter of last year. Now,

7
00:00:23,040 --> 00:00:25,520
Speaker 2: this will bring in your CPI inflation to two point

8
00:00:25,560 --> 00:00:27,920
Speaker 2: two percent for the year, as you say, still within

9
00:00:27,960 --> 00:00:30,520
Speaker 2: the Reserve Banks one to three percent inflation target fan.

10
00:00:30,880 --> 00:00:33,680
Speaker 2: So for the quarter, we do expect that housing costs

11
00:00:33,720 --> 00:00:36,080
Speaker 2: such as rents and construction costs to be a key

12
00:00:36,120 --> 00:00:38,400
Speaker 2: driver behind the increasing prices over the quarter.

13
00:00:38,560 --> 00:00:40,839
Speaker 1: Because I was going to say, this inflation data is

14
00:00:40,880 --> 00:00:43,800
Speaker 1: for December, so what factors will be taken into account

15
00:00:43,840 --> 00:00:46,120
Speaker 1: during that period aside from those two things.

16
00:00:46,840 --> 00:00:51,600
Speaker 2: So besides the CPI result itself, we do see a

17
00:00:51,640 --> 00:00:55,080
Speaker 2: suite of other inflation indicators. For example, we are seeing

18
00:00:55,080 --> 00:00:58,000
Speaker 2: it continue easy in inflation pressures in the news and economy.

19
00:00:58,560 --> 00:01:01,920
Speaker 2: Our latest NDIO less of our business opinion shows some

20
00:01:02,000 --> 00:01:05,280
Speaker 2: easing and cost pressures reported by firms, while proportion of

21
00:01:05,360 --> 00:01:08,560
Speaker 2: firms raising prices in the December quorder remain low. So

22
00:01:08,640 --> 00:01:11,600
Speaker 2: although firms are feeling positive about a recovery and demand

23
00:01:11,600 --> 00:01:15,039
Speaker 2: a head, at the moment demand conditions do remain weak

24
00:01:15,080 --> 00:01:17,440
Speaker 2: and does it weighing on the price and power firms.

25
00:01:17,800 --> 00:01:19,480
Speaker 1: So Christina, how is this going to set us up

26
00:01:19,480 --> 00:01:22,480
Speaker 1: for this year? How are you expecting inflation to track?

27
00:01:23,800 --> 00:01:29,200
Speaker 2: So we do see list in inflation over the coming year,

28
00:01:29,319 --> 00:01:31,959
Speaker 2: but still comfortable and within the Reserve banks one to

29
00:01:32,000 --> 00:01:35,440
Speaker 2: three percent inflation tiger band. The recent appreciation in the

30
00:01:35,480 --> 00:01:38,319
Speaker 2: New Zone dollar does post some upside rest to inflation,

31
00:01:38,760 --> 00:01:41,920
Speaker 2: given that raises the price of important goods. So already

32
00:01:42,000 --> 00:01:44,920
Speaker 2: in our MZAAR quarterly Serve our business opinion, we had

33
00:01:45,200 --> 00:01:48,960
Speaker 2: retailers reporting increased cost pressures and we expect that the

34
00:01:49,000 --> 00:01:51,080
Speaker 2: low New Zealand dollar to have played a part in this.

35
00:01:51,440 --> 00:01:53,320
Speaker 2: So the impact of the low New Zealand dollar on

36
00:01:53,400 --> 00:01:56,160
Speaker 2: inflation is definitely an important development to keep an eye

37
00:01:56,280 --> 00:01:59,240
Speaker 2: on for now, though the signs are that inflation is

38
00:01:59,320 --> 00:02:03,320
Speaker 2: contained and within the Reserve banks target bands. The Reserve

39
00:02:03,360 --> 00:02:06,640
Speaker 2: Bank has indicated that late last year it's intended to

40
00:02:06,680 --> 00:02:09,600
Speaker 2: cut interest rates by another fifty basis point at the

41
00:02:09,639 --> 00:02:12,840
Speaker 2: February meeting, and we don't see recent developments standing in

42
00:02:12,880 --> 00:02:13,440
Speaker 2: the way of that.

43
00:02:14,360 --> 00:02:16,160
Speaker 1: You mentioned the week New Zealand dollar there, what about

44
00:02:16,240 --> 00:02:19,079
Speaker 1: higher oil prices? Could they impact inflation this year?

45
00:02:20,480 --> 00:02:23,400
Speaker 2: Certainly? So you do tend to see the lower New

46
00:02:23,480 --> 00:02:26,560
Speaker 2: Zealand dollar the impact, the more immediate impact of that

47
00:02:26,800 --> 00:02:29,600
Speaker 2: comes through in petrol prices at the pump and also

48
00:02:29,720 --> 00:02:32,400
Speaker 2: crude all price Global crude all prices play a part

49
00:02:32,720 --> 00:02:34,919
Speaker 2: when it comes to what we pay for petrol here

50
00:02:34,919 --> 00:02:38,760
Speaker 2: in New Zealand. Over the longer term, New Zealand dollar

51
00:02:38,840 --> 00:02:41,080
Speaker 2: does have tend to have been more lagged impact on

52
00:02:41,120 --> 00:02:44,560
Speaker 2: a range of other household imported household goods, So you

53
00:02:44,639 --> 00:02:47,520
Speaker 2: do tend to see that comes through in the next

54
00:02:47,520 --> 00:02:49,440
Speaker 2: few quarters when it comes to the impact of the

55
00:02:49,480 --> 00:02:52,200
Speaker 2: lower New Zealand dollar on prices on the retail front.

56
00:02:52,880 --> 00:02:57,000
Speaker 1: You mentioned half percentage point cut to the official cash rate.

57
00:02:57,880 --> 00:02:59,560
Speaker 1: When do you sort of expect that When would you

58
00:02:59,639 --> 00:03:00,640
Speaker 1: expect that to kick in?

59
00:03:02,040 --> 00:03:05,520
Speaker 2: So back in late last year, the Reserve Bank had

60
00:03:05,560 --> 00:03:09,240
Speaker 2: indicated that it would look to cut the oco bernard

61
00:03:09,240 --> 00:03:12,359
Speaker 2: the fifty basis point in its February meeting and then

62
00:03:13,000 --> 00:03:18,480
Speaker 2: and for the further easing to be more measured beyond that. Certainly,

63
00:03:18,480 --> 00:03:21,400
Speaker 2: when we look at what the recent to continue easing

64
00:03:21,440 --> 00:03:26,639
Speaker 2: and inflation pressures, it does suggest that recent deviropments are

65
00:03:26,680 --> 00:03:29,640
Speaker 2: on track in line with the Reserve Banks forecasts. So

66
00:03:29,720 --> 00:03:31,840
Speaker 2: we do expect that it will follow through with that

67
00:03:31,919 --> 00:03:34,240
Speaker 2: fifty basis point cut in its February meeting.

68
00:03:34,320 --> 00:03:37,680
Speaker 1: Okay, cool, what is the impact you think of Trump's

69
00:03:37,720 --> 00:03:40,560
Speaker 1: tariffs and potential tariffs?

70
00:03:41,000 --> 00:03:45,080
Speaker 2: So there has been concern about the inflationary the potential

71
00:03:45,120 --> 00:03:49,120
Speaker 2: inflationary impact of fiscal policies are in the US, so

72
00:03:49,200 --> 00:03:52,240
Speaker 2: that will be an influence in terms of the longer

73
00:03:52,320 --> 00:03:56,080
Speaker 2: term path of interest rates. The fact that there's already

74
00:03:56,240 --> 00:03:59,680
Speaker 2: a discussion about the potential with the inflation andy impactful

75
00:04:00,040 --> 00:04:02,880
Speaker 2: interest rates to be high for longer in the US,

76
00:04:02,960 --> 00:04:05,360
Speaker 2: So that does play a part in terms of a

77
00:04:05,480 --> 00:04:09,680
Speaker 2: particularly with the impact on the New Zone dollar mis

78
00:04:10,000 --> 00:04:13,280
Speaker 2: interst rate differentials. If interest rates were to stay higher

79
00:04:13,320 --> 00:04:17,560
Speaker 2: for longer in the US, then that potentially continue to

80
00:04:17,560 --> 00:04:20,000
Speaker 2: put down with pressure on the New Zone dollar, and

81
00:04:20,040 --> 00:04:21,919
Speaker 2: that plays a part in terms of the price of

82
00:04:22,040 --> 00:04:25,480
Speaker 2: important goods. Here. Certainly, it could play a part in

83
00:04:25,560 --> 00:04:29,360
Speaker 2: terms of the other factors such as how those prices

84
00:04:29,680 --> 00:04:32,640
Speaker 2: global prices feed into prices here in New Zealand as well.

85
00:04:32,880 --> 00:04:34,600
Speaker 1: A lot to keep our eye on this year.

86
00:04:34,680 --> 00:04:38,159
Speaker 2: Christina certainly never dull moment.

87
00:04:38,839 --> 00:04:40,760
Speaker 1: Alwa's good to talk. Thank you so much. That was

88
00:04:40,839 --> 00:04:45,440
Speaker 1: Christina Leung who is the Deputy Chief Executive at n

89
00:04:45,560 --> 00:04:49,480
Speaker 1: Z I e R. And so of course those inflation

90
00:04:49,600 --> 00:04:52,400
Speaker 1: figures will be out today.

91
00:04:53,600 --> 00:04:55,839
Speaker 2: For more from Early Edition with Ryan Bridge.

92
00:04:55,920 --> 00:04:59,400
Speaker 1: Listen live to news Talks it'd be from five am weekdays,

93
00:04:59,560 --> 00:05:01,640
Speaker 1: or follow the podcast on iHeartRadio.