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Speaker 1: July the tenth. The OCR is announced today. Most economists

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Speaker 1: agree it's likely to hold. It's sitting at five point

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Speaker 1: five percent. They do remain divided though about when they'll

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Speaker 1: see a drop, and that's what we want. Chief economist

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Speaker 1: at the ASB Bank is Nick Toughly. You're joins me now,

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Speaker 1: Helen Nick Good mining that OCR rate now has been

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Speaker 1: stuck there for a year. The fight against inflation has

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Speaker 1: been going on for two and a half years. This

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Speaker 1: is becoming a prolonged period of hardship. How long can

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Speaker 1: it last? How long do you think businesses can bear

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Speaker 1: the headwinds?

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Speaker 2: Love, I think people just need to hang in a

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Speaker 2: little bit longer. We do think there are some encouraging

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Speaker 2: signs that inflation will fall and be back within the

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Speaker 2: target band, you know, fairly soon and give the Reserve

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Speaker 2: Bank the comfort that the job is done.

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Speaker 1: Markets have been saying that they are expecting an easy

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Speaker 1: that there are green shoots, but at the same time

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Speaker 1: also saying they don't expect any change to that rate.

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Speaker 2: Well, that's that's right. At this meeting, we don't think

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Speaker 2: the Reserve going to be changing the OCR at all.

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Speaker 2: We expect the Reserve Bank is still going to be

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Speaker 2: fairly cautious as it's looking ahead, and what we're looking

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Speaker 2: for today is some signs that it's just starting to

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Speaker 2: see that inflation will come down a little bit quicker

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Speaker 2: than what it's expecting. The challenge for Reserve Bank though,

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Speaker 2: is that the official inflation figures for the Dune quarter

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Speaker 2: are it to be up till next week, which is

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Speaker 2: not very helpful when you're making your decision right now.

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Speaker 1: The other problem we have actually is the crystal ball

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Speaker 1: gazing and that we're not getting any analysis from the

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Speaker 1: Reserve Bank here. We're just getting a rate announcement.

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Speaker 2: Right, Well, this is correct. This is one of the

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Speaker 2: short announcements. The Reserve Bank does what we call a

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Speaker 2: monetary policy statement four times a year and that's quite

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Speaker 2: Fulsome has lots of detailed forecasts and this is just

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Speaker 2: a review. It's in between a couple of the monetary

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Speaker 2: policy statements, so we don't have a lot to go on.

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Speaker 2: It'll be a few paragraphs and then the details of

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Speaker 2: what they discussed at the meeting.

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Speaker 1: All right, So I'm just a tempering people's expectations. Should

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Speaker 1: we be surprised at how high inflation has main for

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Speaker 1: so long.

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Speaker 2: We've had, such when you look back at it with retrospects,

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Speaker 2: such an unusual period. It was the perfect storm for

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Speaker 2: inflation pressures. Just about any source you could have got

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Speaker 2: inflation from, you got it at the same time. And look,

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Speaker 2: it has been persistent. There's probably been this surprise, not

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Speaker 2: just here but around the world as well, so we're

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Speaker 2: not alone, although our inflation pressures have probably been a

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Speaker 2: touch more persistent than other countries.

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Speaker 1: Nick toughly, I thank you for your time today, and

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Speaker 1: Nick is the asb's chief economists. For more from the

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Speaker 1: Mic Asking Breakfast, listen live to news talks that'd be

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