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Speaker 1: Brian Bridge got to Wellington because this reaction to west

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Speaker 1: pank yesterday. West Pac Bank yesterday came out and lifted

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Speaker 1: their two and five year interest rates by thirty basis points.

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Speaker 1: And if you've got a mortgage, you'll be watching that closely.

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Speaker 1: Nichola Willison's shop around.

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Speaker 2: Wis pack have made that choice. Other banks have not.

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Speaker 2: And look, I really want to see New Zealanders seeing

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Speaker 2: that they have some power when it comes to where

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Speaker 2: they take their mortgage. And don't just look at the

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Speaker 2: headline rates. Go and hold your bank's feet to the fire.

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Speaker 2: See if another bank will give you a better rate.

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Speaker 1: Kelly, you're cold? Is west PAC's chief economist joining me tonight, Kelly,

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Speaker 1: good evening.

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Speaker 3: Good evening.

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Speaker 1: So is this is Westpac the first and the rest

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Speaker 1: will follow?

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Speaker 3: Well, we're certainly the first. I assume that the rest

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Speaker 3: will follow because in the end everybody faces the same

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Speaker 3: increase in funding costs that's occurred in the last few weeks.

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Speaker 1: What's driving that the swap rates? What's going on there?

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Speaker 1: Can you explain it to us? Yeah?

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Speaker 3: Well, the Reserve Bank was unexpectedly hawkish when they did

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Speaker 3: their monetary policy statement a few weeks ago. Now, we

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Speaker 3: kind of expected that they would cut the rate by

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Speaker 3: twenty five basis points, but we didn't expect them to

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Speaker 3: call time on the easing cycle. So as a result,

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Speaker 3: the combination of them basically saying that they saw a

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Speaker 3: high hurdle for further cuts and then after the market

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Speaker 3: interest rates started going up when they said that the

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Speaker 3: market reaction was in line with what they would have expected,

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Speaker 3: has sort of scared the markets a little bit, I suppose,

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Speaker 3: and had them thinking about, well, if they're not cutting,

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Speaker 3: maybe they'll be hiking at some stage, And as a result,

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Speaker 3: they're really brought forward when they think interest rates will

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Speaker 3: start to rise.

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Speaker 1: Zoom. Bank Governor Arna Brennen came out today and said, look,

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Speaker 1: don't read too much into this. You know, we were

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Speaker 1: all options are still on the table. Is the marking

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Speaker 1: going to listen to that?

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Speaker 2: Well?

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Speaker 3: I think sometimes the markets do overreact a little bit here,

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Speaker 3: and I think that probably is what has happened here.

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Speaker 3: I mean, based on what the Reserve Bank said, there's

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Speaker 3: not really any good justification for why the two year

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Speaker 3: and the three year and the five year interst rates

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Speaker 3: should have gone up by well, it's almost sixty basis points.

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Speaker 3: Now that wasn't in the Reserve Bank's forecast. But nevertheless,

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Speaker 3: I think people in the markets got caught surprised by

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Speaker 3: that change in tone from the Reserve Bank and they

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Speaker 3: went positioned for it. So sometimes these markets can overshoot.

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Speaker 1: Kelly, appreciate that update. Thank you, Kelly, you called from Westpac.

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Speaker 1: Just a note of clarification that he was speaking not

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Speaker 1: as a spokesperson for the bank obviously, but here airs

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Speaker 1: an economist for it. For more from hither Duplessy Allen Drive,

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Speaker 1: listen live to news talks. It'd be from four pm weekdays,

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