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Speaker 1: Almost out of nowhere came Adrian Or and his monetary

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Speaker 1: committee and told us all the stuff he said last

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Speaker 1: time seemed to have changed and the cuts that were

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Speaker 1: coming next year are coming now. So twenty five basis points.

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Speaker 1: It was the governor adrianall's with us, very good morning,

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Speaker 1: good morning. Help us out with some of the people

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Speaker 1: who don't quite understand what you've done. Brad Olsen's biggest

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Speaker 1: flip flop of all time. I think one other economist

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Speaker 1: said you'll get a sprained ankle doing the pivot. Explain

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Speaker 1: it to them.

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Speaker 2: I can say that business attire was worn throughout the

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Speaker 2: entire production of this projection. So I think we're okay

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Speaker 2: on our footwear. With what have we done. We've said

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Speaker 2: we are now far more confident as a monetary policy

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Speaker 2: committee that inflation, inflation expectations and price stting behaviors are

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Speaker 2: now consistent with us being able to ease off on

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Speaker 2: the monetary restraint. And that's what we did yesterday. We

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Speaker 2: provided a profile and we cut official care fright by

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Speaker 2: our basis points.

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Speaker 1: Last time we heard from you in May, you weren't

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Speaker 1: cutting till next year. Yesterday you did. That's a dramatic backdown.

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Speaker 2: Well, no, I think plenty of time and plenty of

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Speaker 2: information has happened since May, and we've also communicated that

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Speaker 2: as well. You know, we had a July monetary policy

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Speaker 2: statement where we quite clearly showed our level of growing

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Speaker 2: level of confidence that the monetary policy is working, growing

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Speaker 2: concern that the output is falling quicker than necessary, and

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Speaker 2: so we moved in August.

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Speaker 1: Is May to July. When you talk about your growing confidence,

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Speaker 1: is that actually crashing the economy and you went too

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Speaker 1: hard originally and you suddenly had to help the economy

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Speaker 1: out in the way that most of the retail economists

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Speaker 1: were telling you should do.

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Speaker 2: Anyway, Well, I doubt the latter say there was a

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Speaker 2: view for every economist something slightly different. No, we focused

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Speaker 2: directly on inflation. It's and so in May, pricing expectations,

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Speaker 2: inflation expectations, actual inflation were all inconsistent, far too high

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Speaker 2: for us to have the confidence to begin to cut

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Speaker 2: rates there. That's why we had a whole path. But

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Speaker 2: we did warn about the risks that you know, these

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Speaker 2: this inflation could be more or less sticky, I don't know,

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Speaker 2: and that output could be more volatile and since since May,

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Speaker 2: we've we've seen those risks manifest in a good way.

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Speaker 2: You know, price setting behavior has shifted dramatically, you look

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Speaker 2: across all surveys, all activity. So so that's great.

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Speaker 1: Here's what people can't understand about. Well, first of all,

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Speaker 1: let me ask you us to get this other way.

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Speaker 1: Was a hold the possibility yesterday?

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Speaker 2: No? No, it was a consensus for a cut, and

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Speaker 2: then we discussed about how much, you know, how how

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Speaker 2: far is neutral from where we are, and what kind

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Speaker 2: of pace would we think we were getting back from

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Speaker 2: a period of restraint.

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Speaker 1: All right, here's the other thing that people underppear to understand.

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Speaker 1: Inflation is not in the zero to three percent band? Correct,

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Speaker 1: right here, right now.

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Speaker 2: The most recent measured CPN inflation is for the June quarter,

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Speaker 2: and no, it's at three point three percent exactly before.

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Speaker 1: So you've seen, or appear to have gone from the

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Speaker 1: bloke who needs to see it to a bloke who

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Speaker 1: thinks we'll probably get there anywhere and is prepared to

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Speaker 1: take the risk.

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Speaker 2: We are very confident around, you know, because we can't

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Speaker 2: drive monitary policy through the rear vision mirror, and so

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Speaker 2: we have to have and that's kind of what you do.

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Speaker 1: Isn't it that's and isn't that exactly the role?

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Speaker 2: The document that you're explaining to your listeners has called

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Speaker 2: out monetary policy statement, and if you go on and

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Speaker 2: look at that directly, you'll see forward projections and our

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Speaker 2: activities based on what we think we need to do

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Speaker 2: to keep inflation in the band. Now, nothing we do

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Speaker 2: today is going to affect today's inflation, so we're always

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Speaker 2: looking forward. What have we sitting here? We're seeing more

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Speaker 2: spare capacity of the economy taking out some of the

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Speaker 2: inflation pressure, and we're seeing global pricing falling, and we're

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Speaker 2: seeing business pricing behavior has changed dramatically in New Zonald

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Speaker 2: all for the positive or consistent with one three percent?

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Speaker 1: I get that, But in looking at your projections as

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Speaker 1: I am right here right now, your projection of OCR

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Speaker 1: was five point six percent broadly speaking, and this is

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Speaker 1: the mystery for people. Broadly speaking, your projections are correct.

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Speaker 1: You've projected the economy correctly, and based on that, you've

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Speaker 1: gone and because of this, we're not cutting till next

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Speaker 1: year all of a sudden, based on the same correct

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Speaker 1: projections you are cutting.

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Speaker 2: Can I say it's not all of a sudden talking

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Speaker 2: about five months ago, and we have actually been monitoring

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Speaker 2: and altering policy since then. By the way, the whole

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Speaker 2: of financial market pricing seems to have been able to

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Speaker 2: read the document and read the signals and see what

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Speaker 2: we're doing.

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Speaker 1: They haven't. I don't think they have. They've seen the

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Speaker 1: real economy and they've seen it. They've seen it's broken.

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Speaker 1: But that the economist says of yesterday, we're going, look,

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Speaker 1: we need to cut, but we don't think he will

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Speaker 1: because of what he said previously.

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Speaker 2: Well, you know, I would just implore people to go

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Speaker 2: and have a look at our July Monetary policy statement

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Speaker 2: and read it. I apologize that there were no pictures

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Speaker 2: for some of these people, a forward projection picture, but

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Speaker 2: there are lots of words that explain exactly the uncertainties,

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Speaker 2: the balance for us and our likely next move. And

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Speaker 2: that's all we have followed through on. So you can

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Speaker 2: go directly to the documents.

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Speaker 1: Did you say, all right for a luddite like me,

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Speaker 1: did you say, I've got the may one in front

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Speaker 1: of me. But did you say in July specifically, like

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Speaker 1: Powell is saying, like the Central Bank in Europe said,

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Speaker 1: we will be cutting in July, we will be cutting

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Speaker 1: in September, will be cutting in June. Did you say

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Speaker 1: that specifically or not.

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Speaker 2: I did not say that in July, but I've said

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Speaker 2: that yesterday for August. What did we say in July

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Speaker 2: that I had it sitting right in front of me,

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Speaker 2: But basically we said, inflation pressures are easing, we will

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Speaker 2: be able to temper monetary restraint consistent with that.

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Speaker 1: Easy right, but not in July. So every other reserve

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Speaker 1: bank governor or central bank governor around the world gives

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Speaker 1: us a time. What I'm talking about is.

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Speaker 2: They don't say things like that said September. The market

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Speaker 2: has picked fifteen of Pal's next two moves over the

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Speaker 2: last twelve months utter false.

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Speaker 1: What the guard said June and went in June.

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Speaker 2: The Guard said June, that says great, and they probably

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Speaker 2: said that quite there June. So so no, people, you know.

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Speaker 1: We're in August.

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Speaker 2: We were in July.

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Speaker 1: You didn't say August, and you went in August.

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Speaker 2: Because we didn't know it was going to come. In August,

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Speaker 2: we were saying we are growing on.

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Speaker 1: You just said your day, and so in July you said,

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Speaker 1: you know you did.

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Speaker 2: I just I said, we provided a Ford guidance that

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Speaker 2: inflation pressure are using and we will be able to

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Speaker 2: temper monetary restraint consistent with that.

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Speaker 1: And that's that's not in your mind as well, and.

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Speaker 2: The market and all people who read that thought, Yes,

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Speaker 2: game on for a detract cut August. That end right?

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Speaker 1: And so does that go back to the bluffing conversation

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Speaker 1: that you denied yesterday? In other words, you were freaked

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Speaker 1: out that everyone in the retail market priced it all

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Speaker 1: in already, so you didn't want to go, We're going

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Speaker 1: in August, and so hence the surprise yesterday.

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Speaker 2: No, No, that's a great story of but wrong. What

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Speaker 2: we said in May is we are needing to remain

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Speaker 2: with the monetary restraint based on the risks we see

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Speaker 2: in front of us at that point. By July those

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Speaker 2: risks had the balance, it changed and by August we

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Speaker 2: grew confidence to be able to cut. Remember back in May,

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Speaker 2: inflation north of four percent, inflation expectations, pricing behaviors all

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Speaker 2: at very high levels. Not an environment to boldly rush

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Speaker 2: in to cutting intrastrates.

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Speaker 1: So nothing to apologize for, nothing to see here as planned. Yes,

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Speaker 1: appreciate your time, Adrian or the Reserve Bank government

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