1 00:00:09,093 --> 00:00:12,693 Speaker 1: You're listening to a podcast from News Talks'd be follow 2 00:00:12,773 --> 00:00:16,133 Speaker 1: this and our wide range of podcasts now on iHeartRadio. 3 00:00:16,773 --> 00:00:20,173 Speaker 2: The Reserve Bank has cut the OCR fifty basis points, 4 00:00:20,372 --> 00:00:22,813 Speaker 2: taking it from three percent to two point five percent. 5 00:00:22,853 --> 00:00:25,332 Speaker 2: For analysis, we joined once again by a New Zealand 6 00:00:25,332 --> 00:00:28,213 Speaker 2: Hero Business Editor at Large, Liam Dan Happy days ly 7 00:00:28,373 --> 00:00:28,893 Speaker 2: very exciting. 8 00:00:28,973 --> 00:00:31,973 Speaker 3: Yeah, well, I mean, you know, something happened. Yeah, it 9 00:00:31,973 --> 00:00:33,092 Speaker 3: feels exciting, doesn't it. 10 00:00:33,173 --> 00:00:33,373 Speaker 4: Yeah. 11 00:00:33,693 --> 00:00:37,133 Speaker 5: It feels like some sort of positive decision, even though 12 00:00:37,173 --> 00:00:39,173 Speaker 5: it suggests that we're in a bad state. 13 00:00:39,253 --> 00:00:39,412 Speaker 1: Yeah. 14 00:00:39,453 --> 00:00:41,252 Speaker 4: Yeah, I feel like people are crying out for that 15 00:00:41,333 --> 00:00:43,653 Speaker 4: if the government's listening, you know, that sort of that 16 00:00:43,693 --> 00:00:45,092 Speaker 4: sort of vibe. 17 00:00:45,373 --> 00:00:45,573 Speaker 1: Yeah. 18 00:00:45,613 --> 00:00:46,333 Speaker 3: I mean, let's. 19 00:00:46,132 --> 00:00:48,892 Speaker 4: Remember that there are probably some listeners who have their 20 00:00:48,893 --> 00:00:51,013 Speaker 4: mortgage paid off or don't have a mortgage and have 21 00:00:51,092 --> 00:00:52,853 Speaker 4: some money in a bank and bank deposits going. 22 00:00:53,253 --> 00:00:54,733 Speaker 3: Those people are coming through on the nine two nine 23 00:00:54,773 --> 00:00:55,893 Speaker 3: two around our woos. 24 00:00:55,973 --> 00:00:59,293 Speaker 4: So it's important to mention them. But I guess in 25 00:00:59,373 --> 00:01:02,093 Speaker 4: terms of putting money back in the pockets of a 26 00:01:02,173 --> 00:01:06,093 Speaker 4: large chunk of New Zealand, this will do that. The 27 00:01:06,133 --> 00:01:10,733 Speaker 4: Monetary Policy Committee talked a lot about inflation risks and 28 00:01:10,813 --> 00:01:13,732 Speaker 4: then sort of talked about why they could look through them. 29 00:01:14,373 --> 00:01:17,012 Speaker 4: So they did warn that, you know, inflation is currently 30 00:01:17,013 --> 00:01:19,173 Speaker 4: two point seven, might go to three, might even go 31 00:01:19,212 --> 00:01:23,212 Speaker 4: above it. And so they really had to sort of 32 00:01:23,212 --> 00:01:26,813 Speaker 4: make the case that they think things like food prices 33 00:01:26,813 --> 00:01:31,012 Speaker 4: and power prices and the rates and so on will ease, 34 00:01:31,292 --> 00:01:34,053 Speaker 4: and that they're confident that there is what they call 35 00:01:34,212 --> 00:01:36,812 Speaker 4: enough spare capacity in the economy, which what we would 36 00:01:36,813 --> 00:01:41,133 Speaker 4: say is the economy is stuffed enough to mean that 37 00:01:41,173 --> 00:01:42,532 Speaker 4: inflation will keep coming down. 38 00:01:43,373 --> 00:01:47,292 Speaker 5: So a lot of people, myself included, was saying fifty 39 00:01:47,333 --> 00:01:51,573 Speaker 5: points should have been the amount last time, including members 40 00:01:51,573 --> 00:01:54,653 Speaker 5: of the Monetary Policy Committe. Obviously they were unanimous last time. 41 00:01:54,773 --> 00:01:59,693 Speaker 5: So were they slow? Yeah, did they miss a trick. 42 00:01:59,693 --> 00:02:02,453 Speaker 4: Maybe, you know, like they don't always get it right, 43 00:02:02,933 --> 00:02:06,533 Speaker 4: And part of it is, I mean it certainly that 44 00:02:06,573 --> 00:02:11,533 Speaker 4: second quarter was uglier than people thought. But they did 45 00:02:11,933 --> 00:02:15,053 Speaker 4: actually say that they haven't adjusted their you know, that 46 00:02:15,213 --> 00:02:18,893 Speaker 4: ugly second quarter GDP minus zero point nine. They say 47 00:02:18,893 --> 00:02:21,613 Speaker 4: they haven't adjusted their view on that as much as 48 00:02:21,693 --> 00:02:24,412 Speaker 4: they might have because there is some weird accounting stuff 49 00:02:24,453 --> 00:02:26,413 Speaker 4: in that they think it will reverse out. And they 50 00:02:26,453 --> 00:02:30,813 Speaker 4: said a few positive things about the recovery getting underway. 51 00:02:31,733 --> 00:02:32,493 Speaker 4: Did they get it wrong? 52 00:02:33,813 --> 00:02:35,292 Speaker 3: Yeah? Probably, But I mean. 53 00:02:35,532 --> 00:02:38,453 Speaker 4: With hindsighth it's not for you that because you called it, 54 00:02:38,493 --> 00:02:41,093 Speaker 4: but you know, they do have to look at inflation 55 00:02:41,173 --> 00:02:44,172 Speaker 4: quite seriously. But I think what's certainly what's happened since 56 00:02:44,213 --> 00:02:47,293 Speaker 4: that last call is there's been nothing, nothing, much to 57 00:02:47,333 --> 00:02:49,493 Speaker 4: make them feel more heartened that the economy is coming 58 00:02:49,493 --> 00:02:51,813 Speaker 4: back on its own. They feel like it needs that 59 00:02:51,813 --> 00:02:52,773 Speaker 4: fuel and Genetah. 60 00:02:52,813 --> 00:02:55,453 Speaker 2: Yeah, just on that inflation question, I mean, isn't it 61 00:02:55,493 --> 00:02:58,412 Speaker 2: the case now that in general, we're older, we're wiser, 62 00:02:58,493 --> 00:03:00,773 Speaker 2: We're not going to be going out spending to the 63 00:03:00,813 --> 00:03:04,493 Speaker 2: same level that we were when inflation started a skyrocket. 64 00:03:04,532 --> 00:03:07,373 Speaker 2: It's just not those same dangers exist in the economy 65 00:03:07,613 --> 00:03:09,333 Speaker 2: that is going to see those levels again. 66 00:03:09,613 --> 00:03:11,493 Speaker 4: I would like to think that, but I sort of 67 00:03:11,532 --> 00:03:16,693 Speaker 4: almost can remember even in that post COVID phase, people 68 00:03:16,733 --> 00:03:18,572 Speaker 4: going oh, well, this is different, this is going to 69 00:03:18,613 --> 00:03:21,373 Speaker 4: be a short term inflationary spike. We can look through 70 00:03:21,413 --> 00:03:23,813 Speaker 4: this one, and it just kept going and going. So 71 00:03:23,853 --> 00:03:26,412 Speaker 4: you have to be a bit careful, you know, and 72 00:03:26,893 --> 00:03:29,173 Speaker 4: you are always vulnerable to you know, we still don't 73 00:03:29,173 --> 00:03:31,693 Speaker 4: know quite what the final impact of tariffs and things 74 00:03:31,972 --> 00:03:36,493 Speaker 4: will be whether that's inflationary or the opposite, because you know, 75 00:03:36,493 --> 00:03:38,413 Speaker 4: we might be getting cheap goods out of China and things, 76 00:03:38,493 --> 00:03:40,773 Speaker 4: but some of those big things, I think power prices 77 00:03:40,773 --> 00:03:42,773 Speaker 4: should start to ease, or at least the rate of 78 00:03:42,813 --> 00:03:45,373 Speaker 4: increase will ease. Food prices we've already seen, you know, 79 00:03:45,453 --> 00:03:48,093 Speaker 4: dairy prices coming down. I think you'll start to see 80 00:03:48,093 --> 00:03:52,933 Speaker 4: butter come down in the supermarket finally, and so that 81 00:03:52,973 --> 00:03:56,413 Speaker 4: should ease. And then the more core inflation in the economy, 82 00:03:56,453 --> 00:03:58,413 Speaker 4: which is, you know, the amount we pay each other 83 00:03:58,773 --> 00:04:01,413 Speaker 4: for services and get things done. You know that's that's 84 00:04:01,493 --> 00:04:05,013 Speaker 4: coming off because people basically are more desperate for work. Then, 85 00:04:05,053 --> 00:04:07,653 Speaker 4: you know, that's what they mean by spare capacity. We're 86 00:04:07,693 --> 00:04:09,773 Speaker 4: just not running. The economy is not running at full 87 00:04:09,813 --> 00:04:10,853 Speaker 4: steam by any stretch. 88 00:04:11,053 --> 00:04:13,653 Speaker 3: How much lower can they go? The Reserve Bank must 89 00:04:13,653 --> 00:04:15,493 Speaker 3: be running out of wiggle room pretty soon. 90 00:04:15,693 --> 00:04:18,133 Speaker 4: Well, it's not bad. I mean two point five they 91 00:04:18,173 --> 00:04:22,133 Speaker 4: could go. Well, they've implied that they'll go to two 92 00:04:22,213 --> 00:04:26,133 Speaker 4: point two five and that's sort of priced and expected 93 00:04:26,373 --> 00:04:28,453 Speaker 4: by the end of the year. They could go to two. 94 00:04:28,493 --> 00:04:31,053 Speaker 4: If things don't really pull up, they could go to zero. 95 00:04:31,133 --> 00:04:32,973 Speaker 4: They could go to Actually, you know, if you look 96 00:04:32,973 --> 00:04:35,493 Speaker 4: at what Sweden did in like the two thousand and 97 00:04:36,293 --> 00:04:38,653 Speaker 4: sixteen era or something like that, you can go negative, 98 00:04:38,933 --> 00:04:42,893 Speaker 4: which it gets very very weird. They start paying you 99 00:04:42,933 --> 00:04:43,613 Speaker 4: to take money. 100 00:04:43,613 --> 00:04:45,133 Speaker 3: I think, yeah, what's stagflation. 101 00:04:45,813 --> 00:04:49,333 Speaker 4: Stagflation, Well, that is when you've got the two worst 102 00:04:49,333 --> 00:04:52,493 Speaker 4: things in the economy happening at once, which is higher 103 00:04:52,613 --> 00:04:55,813 Speaker 4: unemployment and higher inflation. And we've kind of got a 104 00:04:55,853 --> 00:04:58,373 Speaker 4: little bit of that at the moment, and you don't 105 00:04:59,133 --> 00:05:00,813 Speaker 4: you know, that's a bad place to be because you'd 106 00:05:00,853 --> 00:05:03,133 Speaker 4: like to think the Reserve Bank can sort of move 107 00:05:03,173 --> 00:05:05,893 Speaker 4: the lever to pull one up and one down when 108 00:05:05,933 --> 00:05:07,813 Speaker 4: both are you know, when both are happening at once, 109 00:05:08,413 --> 00:05:12,293 Speaker 4: that is pretty ugly because dropping the dropping the ocr 110 00:05:12,533 --> 00:05:15,533 Speaker 4: does probably help inflation get a foothold. 111 00:05:15,733 --> 00:05:19,373 Speaker 2: Yeah, early early days. At the moment, it's only released 112 00:05:19,933 --> 00:05:22,933 Speaker 2: forty minutes ago, but any word from the bank shit 113 00:05:22,973 --> 00:05:25,853 Speaker 2: about dropping some of those deposit rates, those interest rates 114 00:05:25,893 --> 00:05:26,573 Speaker 2: a little bit further. 115 00:05:26,773 --> 00:05:31,173 Speaker 4: I haven't seen anything yet. I would say they did 116 00:05:31,213 --> 00:05:33,613 Speaker 4: move a little bit in advance of this. We saw 117 00:05:33,653 --> 00:05:35,733 Speaker 4: some of the one year and two year fixed rates 118 00:05:35,773 --> 00:05:39,413 Speaker 4: come down, so we might not see the fixed move 119 00:05:39,453 --> 00:05:41,653 Speaker 4: too fast. Until I get a bit of a feeling 120 00:05:41,733 --> 00:05:44,013 Speaker 4: the market. It's a feeling for where things go next. 121 00:05:44,053 --> 00:05:46,573 Speaker 4: Floating rates should move quickly and we should start to 122 00:05:46,573 --> 00:05:49,733 Speaker 4: see that come through. Sometimes the banks are quicker with 123 00:05:49,773 --> 00:05:54,213 Speaker 4: those press releases. I don't know. They must be here, yeah. 124 00:05:53,573 --> 00:05:58,213 Speaker 2: Yeah, breather, yeah, absolutely, Thank you very much. Liam. There's 125 00:05:58,213 --> 00:05:59,973 Speaker 2: a bit of excitement out there in the newsroom, so 126 00:06:00,013 --> 00:06:01,813 Speaker 2: we'll see what happens over the next quarter. 127 00:06:02,173 --> 00:06:04,333 Speaker 4: But great to get your analysis as always, good stuff. 128 00:06:04,413 --> 00:06:04,853 Speaker 4: Cheers guys. 129 00:06:04,893 --> 00:06:07,693 Speaker 2: That is Liam Dan New Zealand Heeral Business Editor at 130 00:06:07,773 --> 00:06:10,133 Speaker 2: Large and just repeating that news. The Reserve Bank cut 131 00:06:10,173 --> 00:06:13,093 Speaker 2: the official cash rate fifty basis points, taking it from 132 00:06:13,133 --> 00:06:15,173 Speaker 2: three percent to two point five percent. 133 00:06:15,733 --> 00:06:19,533 Speaker 1: For more from newstalkst B, listen live on air or online, 134 00:06:19,613 --> 00:06:21,973 Speaker 1: and keep our shows with you wherever you go with 135 00:06:22,093 --> 00:06:24,053 Speaker 1: our podcasts on iHeartRadio.