1 00:00:00,080 --> 00:00:02,880 Speaker 1: So to those Reserve Bank announcement almost has a heavyweight 2 00:00:02,960 --> 00:00:05,160 Speaker 1: fight commentary by way of lead up, doesn't it. The 3 00:00:05,160 --> 00:00:07,920 Speaker 1: expectation has been spread, the potential for disappointments real. The 4 00:00:07,960 --> 00:00:10,920 Speaker 1: second guessing's gone, next level retail banks, and mixed between 5 00:00:10,920 --> 00:00:13,160 Speaker 1: a cut, there should be a cut, there won't be 6 00:00:13,200 --> 00:00:15,440 Speaker 1: a cut, there'll be no cut at all. Former finance 7 00:00:15,480 --> 00:00:16,759 Speaker 1: Minister Stephen Joyce's with us. 8 00:00:16,840 --> 00:00:19,280 Speaker 2: Very good morning to you morning, Why how are you 9 00:00:19,440 --> 00:00:20,080 Speaker 2: so very well? 10 00:00:20,160 --> 00:00:22,960 Speaker 1: Two part question? What should he do? What will he do? 11 00:00:24,720 --> 00:00:29,600 Speaker 2: Okay? What should he do? Well? The question is kind 12 00:00:29,640 --> 00:00:32,200 Speaker 2: of do it this way? Two things. One is he'll 13 00:00:32,240 --> 00:00:35,240 Speaker 2: be worried about on the one side, non tradable inflation 14 00:00:36,240 --> 00:00:39,040 Speaker 2: and potentially having to backtrack later, So that's the sort 15 00:00:39,040 --> 00:00:42,960 Speaker 2: of hawkish approach. On the other side, all the dials 16 00:00:43,280 --> 00:00:47,800 Speaker 2: are looking at a pretty flat economy, if not further declining. 17 00:00:48,360 --> 00:00:51,120 Speaker 2: You've got a lot of stuff around the country of 18 00:00:51,159 --> 00:00:56,200 Speaker 2: businesses really struggling, and you've got this energy thing coming 19 00:00:56,240 --> 00:00:59,360 Speaker 2: in now, which is going to have a significant impact 20 00:00:59,480 --> 00:01:02,240 Speaker 2: on economic activity in the second half of the year, 21 00:01:02,520 --> 00:01:06,200 Speaker 2: not perhaps broadly across the economy, but in particular areas 22 00:01:06,200 --> 00:01:10,880 Speaker 2: of the country like Taranhaki, and so yeah, there's the 23 00:01:10,920 --> 00:01:14,000 Speaker 2: two things he and the committee are weighing up. My 24 00:01:14,280 --> 00:01:18,360 Speaker 2: personal view is that we are there. I e. It's 25 00:01:18,440 --> 00:01:21,600 Speaker 2: now time to make a cut, but I'm not convinced 26 00:01:21,640 --> 00:01:21,960 Speaker 2: he will. 27 00:01:22,160 --> 00:01:25,600 Speaker 1: Okay, will he run some commentary that gives a very 28 00:01:25,880 --> 00:01:28,679 Speaker 1: very clear indication that next year's business is now this 29 00:01:28,800 --> 00:01:31,120 Speaker 1: year's business and he'll be going before Christmas. 30 00:01:32,080 --> 00:01:33,880 Speaker 2: I think what will happen is he'll either do a 31 00:01:33,920 --> 00:01:37,720 Speaker 2: cut and be hawkish. He is twenty five, he's point 32 00:01:37,760 --> 00:01:41,440 Speaker 2: two five, but you know things are still on a 33 00:01:41,480 --> 00:01:44,319 Speaker 2: n if edge out there and don't expect anymore necessarily 34 00:01:45,240 --> 00:01:48,040 Speaker 2: this side of Christmas. Or he'll go the other way 35 00:01:48,040 --> 00:01:49,760 Speaker 2: and say, well, we're not doing anything yet, but you 36 00:01:49,760 --> 00:01:51,960 Speaker 2: know things are coming under control that we would expect 37 00:01:52,040 --> 00:01:54,320 Speaker 2: to do. And I think that in practice the two 38 00:01:54,360 --> 00:01:58,280 Speaker 2: things would be the same, right, because it's sentiment and 39 00:01:58,840 --> 00:02:01,400 Speaker 2: the presence or otherwise of a point two five cup. 40 00:02:02,360 --> 00:02:05,320 Speaker 2: And I think he's going to try, you know, whichever 41 00:02:05,360 --> 00:02:08,600 Speaker 2: way he goes on that, you know, the ultimate outcome 42 00:02:08,639 --> 00:02:10,560 Speaker 2: in terms of interest rate track, I don't think will 43 00:02:10,600 --> 00:02:12,440 Speaker 2: be that much difference in practice. 44 00:02:12,760 --> 00:02:13,680 Speaker 1: Is this a balls up? 45 00:02:16,040 --> 00:02:18,400 Speaker 2: I think? Well, I think it's trying to fix the 46 00:02:18,480 --> 00:02:21,560 Speaker 2: balls up that that was there a couple of years ago. 47 00:02:21,680 --> 00:02:24,680 Speaker 2: Absolutely not unique to the New Zealand Reserve Bank, by 48 00:02:24,680 --> 00:02:28,200 Speaker 2: the way, but I think the world central banks got 49 00:02:28,240 --> 00:02:30,920 Speaker 2: together and talked too much and ballsed up the second 50 00:02:31,000 --> 00:02:33,359 Speaker 2: half of the COVID response. Absolutely, and that's what we're 51 00:02:33,360 --> 00:02:33,880 Speaker 2: paying for it. 52 00:02:34,000 --> 00:02:36,640 Speaker 1: A little bit of commentary yesterday suggesting this Monetary committee 53 00:02:36,639 --> 00:02:38,800 Speaker 1: doesn't help what we need of votes? Would you agree 54 00:02:38,840 --> 00:02:39,440 Speaker 1: with that or not? 55 00:02:41,680 --> 00:02:45,280 Speaker 2: I think you know, we're getting into the us of 56 00:02:45,280 --> 00:02:49,040 Speaker 2: how they talk around the table. He could have votes, 57 00:02:49,520 --> 00:02:52,040 Speaker 2: but I don't think in practice will make much difference. 58 00:02:52,480 --> 00:02:53,560 Speaker 2: It's a small committee. 59 00:02:53,760 --> 00:02:56,400 Speaker 1: Okay, if he goes today, does he not have to 60 00:02:56,440 --> 00:02:58,880 Speaker 1: go again and again? Isn't that the theory that once 61 00:02:58,919 --> 00:03:01,519 Speaker 1: you start, you've said it done, we've done enough, Off 62 00:03:01,600 --> 00:03:03,600 Speaker 1: we go, as opposed to, well, I'll do some now 63 00:03:03,600 --> 00:03:05,760 Speaker 1: and I might come back another day. That doesn't look right, 64 00:03:05,800 --> 00:03:06,080 Speaker 1: does it. 65 00:03:07,040 --> 00:03:09,840 Speaker 2: Well, he's got he's got to worry about two things. 66 00:03:09,880 --> 00:03:13,200 Speaker 2: On the on the on the potential for resurgeon inflation, 67 00:03:13,360 --> 00:03:16,959 Speaker 2: this non tradeable inflation, which basically comes back a lot 68 00:03:17,040 --> 00:03:22,880 Speaker 2: to wage rates. And he'll be worried about igniting interest 69 00:03:22,960 --> 00:03:26,840 Speaker 2: and increased wages. When I say increase wages, so that's 70 00:03:27,680 --> 00:03:31,680 Speaker 2: inflationary increase rather than a productivity increase. He and he'll 71 00:03:31,720 --> 00:03:36,360 Speaker 2: be worried about the housing market. So you kiwis are 72 00:03:36,400 --> 00:03:39,240 Speaker 2: great at buying houses. We've been really quiet for the 73 00:03:39,280 --> 00:03:43,000 Speaker 2: last two years, last year in a bit, And and 74 00:03:43,160 --> 00:03:44,840 Speaker 2: he will be worried that by say all right, no 75 00:03:44,920 --> 00:03:47,440 Speaker 2: we're away, let's rush out and buy some houses off 76 00:03:47,480 --> 00:03:49,800 Speaker 2: each other and push up house prices and feel good 77 00:03:49,800 --> 00:03:52,560 Speaker 2: and start spending money again and go too far. So 78 00:03:53,240 --> 00:03:55,960 Speaker 2: I think that's why I think he'll be if he 79 00:03:56,000 --> 00:03:57,880 Speaker 2: even does a cut. If they do a cut today, 80 00:03:57,920 --> 00:03:59,880 Speaker 2: I think they'll still be quite hawkish because they will 81 00:03:59,920 --> 00:04:03,120 Speaker 2: be worried about people just saying, oh well, it's all 82 00:04:03,120 --> 00:04:04,920 Speaker 2: over now, we just go back to what we're doing before. 83 00:04:05,000 --> 00:04:07,640 Speaker 1: Exactly Jesus. Interesting is that, Stephen. Appreciate your time as always, 84 00:04:07,680 --> 00:04:10,640 Speaker 1: Former Finance Minister Stephen Joyce. For more from the Mic 85 00:04:10,640 --> 00:04:13,760 Speaker 1: Asking Breakfast, listen live to news talks. It'd be from 86 00:04:13,840 --> 00:04:17,279 Speaker 1: six am weekdays, or follow the podcast on iHeartRadio.