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Speaker 1: Do the ocr big day for the new Reserve Bank

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Speaker 1: Governor Arna Breman. Today she will reveal her first osier

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Speaker 1: decision as the head of the RBNZ. All signs point

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Speaker 1: to a hold. But then what happens after that? When

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Speaker 1: do we start hiking? That's the question. Will we glean

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Speaker 1: some insight Kelly E Cold Westpac chief economists with us

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Speaker 1: this morning, Kelly, good morning, good morning. So hold today

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Speaker 1: and then you know the isn't the problem that they say, oh,

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Speaker 1: we might hike and I don't know December and then

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Speaker 1: the market price is in a hike in like April.

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Speaker 2: Yeah, well that is the balancing action's got to do here, right,

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Speaker 2: Like the market has already got a bit of a

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Speaker 2: hawkish bank. I've got a couple of hikes christ and

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Speaker 2: for this year already. And she will know that if

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Speaker 2: they're too aggressive, then they'll scare the horses into having

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Speaker 2: people expect that it's all going to happen tomorrow.

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Speaker 1: So fine balancing acts. What do they need to give

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Speaker 1: her a sort of a foward track where she's sort

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Speaker 1: of outline when she started that they would right, yeah,

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Speaker 1: well they're going to.

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Speaker 2: Give us some poor cast they always do, and those

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Speaker 2: I expect will indicate that there's going to be a

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Speaker 2: good chance of a tightening before the end of the year.

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Speaker 2: But you know, important here is I think what the

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Speaker 2: communications is around it. This is government Brevan's first MPs,

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Speaker 2: so we're going to learn a lot about how she

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Speaker 2: thinks about things and sorts of factors that the Reserve

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Speaker 2: Bank thinks are important right now, and crucially just how

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Speaker 2: much confidence that they have in the eclomic recovery that

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Speaker 2: we're seeing a few signs of.

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Speaker 1: Now, what about inflation? You know, because last end of

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Speaker 1: last year everyone was saying to me and to us

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Speaker 1: that we don't worry, we can look through inflation. You know,

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Speaker 1: it's going to be fine. Are we still looking through

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Speaker 1: all this?

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Speaker 2: Yeah? Well that's one of the key questions. I mean,

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Speaker 2: the uncomfortable thing for the Reserve Bank is inflation is

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Speaker 2: above three percent right now. So I mean they're going

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Speaker 2: to be saying to us that inflation is too high

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Speaker 2: because it is one of the things that we're we're

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Speaker 2: all going to be studying quite carefully, is just how

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Speaker 2: comfortable are they going to be with inflation staying above

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Speaker 2: two percent for the sevil future? You know, what does

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Speaker 2: inflation heading back towards two percent, really mean if it's

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Speaker 2: only going to bottom out, it's a two point two,

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Speaker 2: two point three or two point four percent.

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Speaker 1: She did say when quite clearly, and you've got to

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Speaker 1: listen to people when they say things when she came

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Speaker 1: in when she came to New Zealand, she said in look,

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Speaker 1: inflation is my number one job. It is my only job.

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Speaker 2: That's right, she said consistently, she's laser focused on inflation,

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Speaker 2: and in the Reserve banks mandate it only has inflation

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Speaker 2: in the target. So that would logically mean that if

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Speaker 2: this economy is going to recover, then they should shouldn't

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Speaker 2: be happy with keeping interest rates below three percent because

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Speaker 2: those are pretty stimulatory levels. I think kind of like

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Speaker 2: a focus really has to be here on how confident

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Speaker 2: are they in the recovery. When are they going to

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Speaker 2: get confidence that there won't be any extra capacity list

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Speaker 2: of an economy? Is that going to something that's going

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Speaker 2: to take them six months or twelve months to get

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Speaker 2: their heads around?

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Speaker 1: Kelly, appreciate you were update this morning. Kelly a Cold

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Speaker 1: WESTPACTEEF economists. For more from earlier edition with Ryan Bridge,

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