1 00:00:00,480 --> 00:00:03,080 Speaker 1: Central banks around the world seem to be in a 2 00:00:03,120 --> 00:00:05,080 Speaker 1: bit of a crouch and hold at the moment we had. 3 00:00:05,160 --> 00:00:08,200 Speaker 1: The US Fed haven't moved, although Trump wants them to 4 00:00:08,200 --> 00:00:12,320 Speaker 1: do desperately. Today, the RBA holding steady. Tomorrow our decision, 5 00:00:13,000 --> 00:00:15,680 Speaker 1: what will it be? Kelly Echold from Westpack is with 6 00:00:15,720 --> 00:00:18,720 Speaker 1: me tonight. Hey Kelly, Hi, how are you Yeah? You're 7 00:00:18,720 --> 00:00:19,680 Speaker 1: ready to do the business? 8 00:00:19,720 --> 00:00:24,160 Speaker 2: Kelly, Well, we're not expecting any business to be done tomorrow. 9 00:00:24,480 --> 00:00:27,680 Speaker 2: We think we're going to leave the OCR unchanged, as 10 00:00:27,720 --> 00:00:31,640 Speaker 2: they signaled by having no bias about what was going 11 00:00:31,640 --> 00:00:33,760 Speaker 2: to happen to this meeting when they spoke to us 12 00:00:33,800 --> 00:00:35,360 Speaker 2: back in Beck in May. 13 00:00:35,680 --> 00:00:37,080 Speaker 1: What do they risk if they do come? 14 00:00:39,240 --> 00:00:44,040 Speaker 2: What their risk is that the CPI that's due later 15 00:00:44,120 --> 00:00:48,920 Speaker 2: on this month comes in uncomfortably high. And some of 16 00:00:48,920 --> 00:00:52,920 Speaker 2: the data that we've seen since May suggest that it 17 00:00:53,000 --> 00:00:54,800 Speaker 2: is actually going to be a bit stronger than what 18 00:00:54,840 --> 00:00:58,920 Speaker 2: they forecast back in May, and quite likely actually that 19 00:00:59,080 --> 00:01:01,640 Speaker 2: headline CPO is going to be a pretty close to 20 00:01:01,680 --> 00:01:04,319 Speaker 2: three piece three percent, or maybe even a bit above 21 00:01:04,319 --> 00:01:07,360 Speaker 2: it as we go through the rest of this year. 22 00:01:07,720 --> 00:01:10,520 Speaker 2: So it's quite hard, I think for an NPC that's 23 00:01:10,560 --> 00:01:13,440 Speaker 2: got a single mandate on one to three percent inflation 24 00:01:14,000 --> 00:01:17,960 Speaker 2: to be cutting rates when inflation is quite that high. 25 00:01:18,120 --> 00:01:20,280 Speaker 1: Yeah, and then you've got the global backdrop, and you've 26 00:01:20,319 --> 00:01:22,600 Speaker 1: got Trump and all that stuff, and the things that 27 00:01:22,640 --> 00:01:24,560 Speaker 1: no one really knows about at the moment. 28 00:01:25,600 --> 00:01:29,200 Speaker 2: Well, there's tons of uncertainty around that. I mean, generally, 29 00:01:29,400 --> 00:01:32,319 Speaker 2: I think the tail risks about what Trump has been 30 00:01:32,400 --> 00:01:35,839 Speaker 2: up to have reduced quite a lot since April and May, 31 00:01:35,920 --> 00:01:39,480 Speaker 2: and as a result, we see consensus forecasts for global 32 00:01:39,480 --> 00:01:42,600 Speaker 2: growth actually being revised up a bit. As that's been reflected. 33 00:01:43,160 --> 00:01:47,000 Speaker 2: Equity markets have been quite strong, but nevertheless, we don't 34 00:01:47,040 --> 00:01:48,680 Speaker 2: quite know what's going to happen. We saw all of 35 00:01:48,720 --> 00:01:52,360 Speaker 2: Trump's letters start to come out today. Some countries have 36 00:01:52,440 --> 00:01:54,720 Speaker 2: still got pretty high terrorists to deal with. We don't 37 00:01:54,760 --> 00:01:58,200 Speaker 2: know what New Zealand's going to end up with, and importantly, 38 00:01:58,320 --> 00:02:00,640 Speaker 2: we don't quite know how to negotiate. It's going to 39 00:02:00,760 --> 00:02:03,640 Speaker 2: end up with some of the uis's biggest trading partners 40 00:02:03,640 --> 00:02:06,880 Speaker 2: in Europe and China and in the year as well. 41 00:02:07,080 --> 00:02:09,240 Speaker 1: Kelly, we're not even at neutral yet. I mean, we're 42 00:02:09,880 --> 00:02:13,560 Speaker 1: we're touching neutral, but we're not completely there yet. Do 43 00:02:13,600 --> 00:02:15,320 Speaker 1: you think we will get there this year. 44 00:02:16,600 --> 00:02:18,919 Speaker 2: I think we could easily be at neutral now, Ryan, 45 00:02:19,000 --> 00:02:20,920 Speaker 2: and I think even the Brazerve Bank will tell you 46 00:02:21,000 --> 00:02:23,160 Speaker 2: that they don't know for sure exactly where it is. 47 00:02:23,680 --> 00:02:26,200 Speaker 2: Their range for neutral is between two and a half 48 00:02:26,240 --> 00:02:28,880 Speaker 2: and three and a half percent, and in fact, most 49 00:02:28,880 --> 00:02:31,600 Speaker 2: central banks around the world have actually got themselves into 50 00:02:31,639 --> 00:02:35,480 Speaker 2: the neutralish stone. Now, the idea of neutral, in terms 51 00:02:35,560 --> 00:02:38,679 Speaker 2: of guiding what's going to happen to interest rates from 52 00:02:38,720 --> 00:02:41,480 Speaker 2: here when you're already quite close to it, isn't actually 53 00:02:41,560 --> 00:02:44,240 Speaker 2: that helpful any more. What's going to be more helpful 54 00:02:44,320 --> 00:02:46,799 Speaker 2: is trying to get a good guide on where inflation 55 00:02:46,960 --> 00:02:49,120 Speaker 2: is going to go and perhaps where the economy is 56 00:02:49,120 --> 00:02:49,960 Speaker 2: going to go as well. 57 00:02:50,720 --> 00:02:54,760 Speaker 1: On the global outlook, you know, we've got ten percent 58 00:02:54,840 --> 00:02:58,000 Speaker 1: tariffs from the US. If that's the worst that happens, 59 00:02:58,040 --> 00:03:00,640 Speaker 1: then that's probably quite a good thing. Well not a 60 00:03:00,639 --> 00:03:03,119 Speaker 1: good thing, of course, it could be zero, but kind 61 00:03:03,120 --> 00:03:04,560 Speaker 1: of got off lightly when you look at what else 62 00:03:04,639 --> 00:03:05,600 Speaker 1: is happening around the world. 63 00:03:06,600 --> 00:03:08,800 Speaker 2: Well, at ten percent tariff in New zealand's going to 64 00:03:08,800 --> 00:03:10,360 Speaker 2: be the low end of the scale. If that's what 65 00:03:10,400 --> 00:03:12,800 Speaker 2: we end up with, and I'd say that's probably what 66 00:03:12,880 --> 00:03:14,600 Speaker 2: we are going to end up with at least for 67 00:03:14,639 --> 00:03:17,680 Speaker 2: a while. And that's the line that we've had on 68 00:03:17,720 --> 00:03:21,120 Speaker 2: that is that's unwelcome, but manageable. I mean, we've actually 69 00:03:21,200 --> 00:03:24,040 Speaker 2: had some pretty strong commodity prices in the last year 70 00:03:24,120 --> 00:03:27,040 Speaker 2: or so, so the ten percent tariff has just taken 71 00:03:27,080 --> 00:03:28,840 Speaker 2: a bit of a bit of cream off the top, 72 00:03:29,120 --> 00:03:32,239 Speaker 2: as opposed to necessarily leaving us in a pretty tight bind. 73 00:03:32,560 --> 00:03:36,000 Speaker 1: Appreciate your time, Kelly Echold, Westpac chief Economists on the 74 00:03:36,120 --> 00:03:40,160 Speaker 1: decision from the Reserve Bank tomorrow. For more from Heather 75 00:03:40,240 --> 00:03:43,280 Speaker 1: Duplessy Allen Drive, listen live to news Talks. It'd be 76 00:03:43,400 --> 00:03:47,280 Speaker 1: from four pm weekdays, or follow the podcast on iHeartRadio.