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Speaker 1: Cray and Bridge.

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Speaker 2: Most economists expecting the official cash right to be cut

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Speaker 2: this week fifty basis points to three point seventy five percent.

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Speaker 2: Inflation currently running at two point two percent, so inside

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Speaker 2: the range. Interestingly, though not crucially, food price inflation is

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Speaker 2: actually on the rise again. Economics professor Robert McCulloch is

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Speaker 2: with me, Robert, Good evening.

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Speaker 1: Good evening.

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Speaker 2: There's two questions, Will they cut and then should they cut?

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Speaker 2: Will they cut?

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Speaker 1: Probably, that's what most of the big bank monopoly economists

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Speaker 1: are saying. And Liam down at the Herald said they're

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Speaker 1: going to cut, so they you know, that's what they're

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Speaker 1: all saying.

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Speaker 2: Well, if Lillam says it, it's true.

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Speaker 1: If Liam says it must be true. That the Herald

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Speaker 1: says it's true, it has to be true.

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Speaker 2: Exactly. We love Liam. Should they cut?

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Speaker 1: No? I think they probably shouldn't cut. No. Why Well,

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Speaker 1: Nicola Willis changed the Reserve Bank Act the Finance Minister

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Speaker 1: when she came to power, and the old mandate of

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Speaker 1: the Reserve Bank by law is price stability, and that's

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Speaker 1: to find it. It's getting inflation in that one to

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Speaker 1: three percent bracket. And like you said in your introduction.

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Speaker 1: Where is it now? It's exactly at the midpoint, it's

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Speaker 1: two percent. Well, it's quite hard to argue with the

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Speaker 1: one line argument. We're exactly at the midpoint, inflation is there,

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Speaker 1: and yet the bank and the big bank economists are

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Speaker 1: all baying for even more cuts. So one has to

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Speaker 1: ask why.

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Speaker 2: Well, they're also I suppose got an eye on the

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Speaker 2: wider economy and the fact that we're up Shite Creek

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Speaker 2: without a paddle.

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Speaker 1: I think that's the answer. Exactly. They're panicking and they

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Speaker 1: think the economy is in a terrible state, is it. Well,

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Speaker 1: you asked me the question should they cut? And by law,

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Speaker 1: the Reserve Bank Act, which was passed by the incoming Coalition,

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Speaker 1: says you should only consider the rate of inflation when

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Speaker 1: you make these decisions. That's the law of the country. Now.

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Speaker 1: Before it said you could consider the state of the economy,

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Speaker 1: it said maximum sustainable employment as well as price stability.

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Speaker 1: So by law they're only meant to look at inflation.

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Speaker 1: But I think you're exactly right. What are they doing.

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Speaker 1: They're not looking at the inflation rate. It's exactly two percent,

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Speaker 1: but they're panicking about the state of the economy. That's

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Speaker 1: the truth. I think that's what is actually going on.

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Speaker 2: Robert, thank you. Robert McCulloch, who's an economics professor with US.

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Speaker 2: A contrary, well, I suppose it's not so much of

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Speaker 2: a contrarian view. He's just saying, yes, he thinks they

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Speaker 2: will cut, like everybody else is saying, but technically, by

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Speaker 2: the letter of the law, they really shouldn't.

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