1 00:00:00,320 --> 00:00:01,280 Speaker 1: Ryan Bridge. 2 00:00:01,680 --> 00:00:04,040 Speaker 2: Right, let's get to Danae Tip Traeney, who's the Heralds 3 00:00:04,040 --> 00:00:06,560 Speaker 2: willing to business editor with us this evening, Jay, Good evening, 4 00:00:07,440 --> 00:00:10,480 Speaker 2: Good evening, Ryan. So we've had the Reserve Bank governor 5 00:00:11,320 --> 00:00:14,400 Speaker 2: busy doing a whole bunch of interviews this week. What 6 00:00:14,520 --> 00:00:17,279 Speaker 2: have you made of them and what impact they've had 7 00:00:17,320 --> 00:00:18,480 Speaker 2: on markets? 8 00:00:19,840 --> 00:00:24,119 Speaker 1: Yeah, Look, interestingly, this week Arna Breeman came out and 9 00:00:24,160 --> 00:00:27,639 Speaker 1: did three interviews in which she delivered the same message. 10 00:00:28,000 --> 00:00:31,160 Speaker 1: She basically tried to talk markets down a weeb it 11 00:00:31,640 --> 00:00:35,639 Speaker 1: after the Reserve Bank cut the OCR in November. The 12 00:00:35,640 --> 00:00:40,479 Speaker 1: market really fixated on some of the commentary around the cut. 13 00:00:40,680 --> 00:00:44,199 Speaker 1: It got ahead of itself at priced in three OCR 14 00:00:44,280 --> 00:00:47,760 Speaker 1: hikes for next year. That's quite a lot. Wholesale interest 15 00:00:47,840 --> 00:00:49,880 Speaker 1: rates went up, you know that' saw Westpac, A and 16 00:00:50,000 --> 00:00:53,280 Speaker 1: Z the cop Bank all lift mortgage and term deposit rates. 17 00:00:54,920 --> 00:00:57,480 Speaker 1: This week. The governor just came out to basically, and 18 00:00:57,600 --> 00:01:02,440 Speaker 1: Reserve Bank speak, say calm down. So I spoke to 19 00:01:02,480 --> 00:01:06,039 Speaker 1: her yesterday afternoon. She didn't say calm down exactly, but 20 00:01:06,240 --> 00:01:10,360 Speaker 1: she directed the market to focus on the Reserve Bank's 21 00:01:10,360 --> 00:01:14,080 Speaker 1: OCR track and it's November statement. And according to that track, 22 00:01:14,120 --> 00:01:17,480 Speaker 1: the Reserve Bank reckons the ocr will stay low for 23 00:01:17,560 --> 00:01:20,240 Speaker 1: next year. In fact, there's a slight chance it could 24 00:01:20,240 --> 00:01:23,640 Speaker 1: even be cut a bit more. So she tried to 25 00:01:23,640 --> 00:01:26,640 Speaker 1: emphasize that and that did move the market. The market 26 00:01:26,720 --> 00:01:29,479 Speaker 1: has now priced in two o CR hikes for next year, 27 00:01:29,520 --> 00:01:33,880 Speaker 1: not three, and those wholesale interest rates have come down, 28 00:01:34,319 --> 00:01:36,760 Speaker 1: but they're still quite a bit above where they were 29 00:01:37,200 --> 00:01:38,440 Speaker 1: before the November statement. 30 00:01:38,760 --> 00:01:43,199 Speaker 2: And hasn't that that change hasn't prompted the retails yet 31 00:01:43,200 --> 00:01:46,160 Speaker 2: to undo the you know, they like that they had 32 00:01:46,200 --> 00:01:49,080 Speaker 2: initially put in right no, and I. 33 00:01:49,080 --> 00:01:52,280 Speaker 1: You know, I just I don't think they will. So, 34 00:01:52,360 --> 00:01:55,280 Speaker 1: you know, some banks haven't shifted yet, or or they 35 00:01:55,360 --> 00:01:58,000 Speaker 1: might not shift at all. I think the market is 36 00:01:58,320 --> 00:02:01,240 Speaker 1: you know, it's a lot of information toest this week. 37 00:02:01,240 --> 00:02:04,400 Speaker 1: It's probably still going to look to the GDP figures 38 00:02:04,400 --> 00:02:07,400 Speaker 1: out tomorrow, you know, markets factor and a bunch of 39 00:02:07,480 --> 00:02:11,040 Speaker 1: things when they set you know, when they sort of 40 00:02:11,120 --> 00:02:15,200 Speaker 1: do their trading in the money markets. You know. But 41 00:02:15,280 --> 00:02:18,160 Speaker 1: I think her comments did have an effect, and they 42 00:02:18,160 --> 00:02:21,720 Speaker 1: actually did take the market by surprise, because last week 43 00:02:21,840 --> 00:02:25,320 Speaker 1: we talked to the governor and we asked her, you know, 44 00:02:25,440 --> 00:02:27,240 Speaker 1: she comfortable with where the market is at and she 45 00:02:27,280 --> 00:02:31,160 Speaker 1: didn't really say anything this way or that way, But 46 00:02:31,240 --> 00:02:33,480 Speaker 1: at that point she hadn't actually met with her fellow 47 00:02:33,480 --> 00:02:35,919 Speaker 1: Monetary Policy Committee members. You know, it's the whole committee 48 00:02:35,919 --> 00:02:39,160 Speaker 1: that sets monetary policy. So after we meet her last week, 49 00:02:39,240 --> 00:02:42,359 Speaker 1: she did meet with the committee members and then came 50 00:02:42,360 --> 00:02:45,200 Speaker 1: out on Monday with, you know, with this sort of 51 00:02:45,280 --> 00:02:48,400 Speaker 1: jaw boning. So you know, some people have talked her 52 00:02:48,480 --> 00:02:50,560 Speaker 1: are quite critical of this. They said, why why didn't 53 00:02:50,600 --> 00:02:52,880 Speaker 1: she meet with her committee members as soon as she'd 54 00:02:52,919 --> 00:02:54,960 Speaker 1: got the job at the beginning of December, you know, 55 00:02:55,000 --> 00:02:57,079 Speaker 1: why did she wait so long? So I think that's 56 00:02:57,120 --> 00:02:58,240 Speaker 1: that's probably a fair question. 57 00:02:59,120 --> 00:03:03,000 Speaker 2: Now, the new capital requirements for the banks, you know, 58 00:03:03,120 --> 00:03:07,600 Speaker 2: sort of undoing what adrien Or had done. Do you 59 00:03:07,639 --> 00:03:09,280 Speaker 2: think that we spoke to the co Op Bank earlier, 60 00:03:09,320 --> 00:03:11,040 Speaker 2: it didn't sound like it's going to really have much 61 00:03:11,040 --> 00:03:13,360 Speaker 2: of an impact. I know they don't come in immediately, 62 00:03:13,440 --> 00:03:17,000 Speaker 2: but much of an impact on our interest rates or 63 00:03:17,200 --> 00:03:18,280 Speaker 2: what we're paying the banks. 64 00:03:19,639 --> 00:03:23,160 Speaker 1: Well, the Reserve Bank thinks that ultimately it will have 65 00:03:23,200 --> 00:03:26,480 Speaker 1: an effect. So remember these capital rules, which aimed at 66 00:03:26,480 --> 00:03:30,440 Speaker 1: making banks strong, they're being phased in. They'll be fully 67 00:03:30,440 --> 00:03:33,560 Speaker 1: phased in twenty twenty eight, the Reserve Banks saying that 68 00:03:33,560 --> 00:03:38,200 Speaker 1: with the changes it will make, it'll save banks about 69 00:03:38,520 --> 00:03:42,120 Speaker 1: reduce their funding costs by about twelve basis points compared 70 00:03:42,160 --> 00:03:46,440 Speaker 1: to that twenty twenty eight level. So in theory, you know, 71 00:03:46,560 --> 00:03:50,760 Speaker 1: banks should pass that cost saving onto customers. That's what 72 00:03:50,800 --> 00:03:53,960 Speaker 1: the Reserve Bank thinks, you know, they think it could 73 00:03:54,000 --> 00:03:56,360 Speaker 1: be in the magnitude of about ten basis points. The 74 00:03:56,360 --> 00:03:59,120 Speaker 1: savings that you might get on your you know, your 75 00:03:59,280 --> 00:04:02,400 Speaker 1: your loans and you know, if you're a savor that 76 00:04:02,440 --> 00:04:06,200 Speaker 1: the extra interest you'll get for your term deposit about 77 00:04:06,200 --> 00:04:09,000 Speaker 1: ten basis points. But that's compared to what it would 78 00:04:09,040 --> 00:04:11,680 Speaker 1: have been under the old rules by twenty twenty eight. 79 00:04:11,720 --> 00:04:15,200 Speaker 1: So that sounds awfully complex. I mean, it is a change, 80 00:04:15,560 --> 00:04:20,240 Speaker 1: Is it huge? No, Will banks pass that cost saving 81 00:04:20,320 --> 00:04:25,600 Speaker 1: on don't know? Will their shareholders just pocket that cost saving? Well, 82 00:04:25,680 --> 00:04:30,479 Speaker 1: you know probably. I talked to Nikola Willis about that 83 00:04:30,560 --> 00:04:32,000 Speaker 1: today and I said, well, this is going to be 84 00:04:32,080 --> 00:04:35,560 Speaker 1: really hard to measure. You know, so many things factor 85 00:04:35,560 --> 00:04:38,280 Speaker 1: into bank profits. How are we going to know exactly? 86 00:04:39,200 --> 00:04:40,960 Speaker 1: So I think that that's a key question. I mean, 87 00:04:41,040 --> 00:04:44,159 Speaker 1: the thing is here, though, when the rules first came in, 88 00:04:44,240 --> 00:04:47,560 Speaker 1: we didn't have this deposit compensation scheme. We now have that. 89 00:04:48,200 --> 00:04:50,200 Speaker 1: So that means that if your bank collapses, you'll get 90 00:04:50,200 --> 00:04:53,320 Speaker 1: some of your money back, which is an extra thing 91 00:04:53,320 --> 00:04:55,920 Speaker 1: that makes banks a bit stronger. So the Reserve Bank 92 00:04:56,000 --> 00:04:58,960 Speaker 1: is saying, look, because we have this new deposit compensation scheme, 93 00:04:59,320 --> 00:05:02,120 Speaker 1: we can eat up on these capital rules a bit. 94 00:05:03,880 --> 00:05:06,280 Speaker 2: So yeah, makes sense. Hey, you know the deposit This 95 00:05:06,320 --> 00:05:08,400 Speaker 2: is a random question, but I've kind of been thinking 96 00:05:08,400 --> 00:05:10,760 Speaker 2: about it, and maybe it's a dumb question. I'm just 97 00:05:10,800 --> 00:05:15,520 Speaker 2: gonna ask. So it's one hundred thousand dollars per If 98 00:05:15,560 --> 00:05:17,640 Speaker 2: you've got an account with the bank, they guarantee you 99 00:05:17,680 --> 00:05:20,960 Speaker 2: up to one hundred thousand dollars. Would let's say you've 100 00:05:20,960 --> 00:05:23,159 Speaker 2: got five hundred thousand dollars. Should you not put one 101 00:05:23,200 --> 00:05:26,760 Speaker 2: hundred thousand dollars into different five different banks and then 102 00:05:26,800 --> 00:05:29,240 Speaker 2: be covered five times or is it put per person? 103 00:05:30,520 --> 00:05:30,760 Speaker 1: Yeah? 104 00:05:30,839 --> 00:05:31,360 Speaker 2: No, you're right. 105 00:05:31,360 --> 00:05:34,000 Speaker 1: If you have five hundred thousand dollars, you're best off 106 00:05:34,080 --> 00:05:36,719 Speaker 1: under the scheme to split it. So if you have 107 00:05:36,839 --> 00:05:40,039 Speaker 1: five hundred thousand at one bank, that bank collapses, you'll 108 00:05:40,040 --> 00:05:42,680 Speaker 1: only get one hundred thousand back. But if you've spread 109 00:05:42,680 --> 00:05:45,839 Speaker 1: your five hundred thousand across five banks, and all five 110 00:05:45,920 --> 00:05:49,040 Speaker 1: banks collapse, you'll get you'll get one hundred thousand back 111 00:05:49,080 --> 00:05:52,560 Speaker 1: from each bank. So you know this is not not 112 00:05:52,680 --> 00:05:57,960 Speaker 1: financial advice, but if you want to maximize your best 113 00:05:59,000 --> 00:06:02,520 Speaker 1: then that's probably good idea. I had wandered actually whether 114 00:06:02,560 --> 00:06:04,240 Speaker 1: we'd see a whole lot of money moved when the 115 00:06:04,279 --> 00:06:06,040 Speaker 1: scheme came into place in the middle of the year 116 00:06:06,320 --> 00:06:08,880 Speaker 1: because of this, But it sounds like there sort of 117 00:06:09,080 --> 00:06:11,960 Speaker 1: hasn't been noticeable sums shifted. 118 00:06:11,600 --> 00:06:13,880 Speaker 2: About maybe no one. That's because we haven't got the 119 00:06:13,920 --> 00:06:16,320 Speaker 2: word out yet. Now that now that you're giving us 120 00:06:16,320 --> 00:06:18,120 Speaker 2: this great financial advice, Janney. 121 00:06:18,040 --> 00:06:21,240 Speaker 1: Yeah exactly, I'm going to get some some very angry phocals, 122 00:06:21,279 --> 00:06:24,800 Speaker 1: but no, I mean that is that is how it works. Okay, 123 00:06:24,839 --> 00:06:27,400 Speaker 1: finance companies and things are included in that as well. 124 00:06:27,720 --> 00:06:29,760 Speaker 2: Fascinating. Now I just need to find half a million 125 00:06:29,800 --> 00:06:32,800 Speaker 2: dollars then I'll be yeah easy, Jane. Thank you to 126 00:06:33,120 --> 00:06:37,000 Speaker 2: trainee from The Herald is with us this evenings. For 127 00:06:37,120 --> 00:06:40,719 Speaker 2: more from Heather Duplessy Allen Drive, listen live to news talks. 128 00:06:40,760 --> 00:06:43,919 Speaker 2: It'd be from four pm weekdays, or follow the podcast 129 00:06:44,040 --> 00:06:45,040 Speaker 2: on iHeartRadio.