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Speaker 1: As I was telling you earlier, there's been a surprise

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Speaker 1: call from the ASB economists late this afternoon. They now

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Speaker 1: also think that the Reserve Bank will drop the official

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Speaker 1: cash rate next week. Liam dan Is The Herald's Business

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Speaker 1: editor at large, ALM got I mean, would you consider

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Speaker 1: this now mounting pressure on the Reserve Bank, given that

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Speaker 1: you've got ASB B and z at ankiw we Bank

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Speaker 1: saying go next week?

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Speaker 2: Yeah, well, I mean it certainly is pressure of a kind.

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Speaker 2: It's kind of exciting. It's probably the most interesting ocr

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Speaker 2: call we've had for well, it is for more than

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Speaker 2: a year. Good on them, ASBs sow in caution the

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Speaker 2: wind carp ADM. I think they said, you know that

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Speaker 2: that we can go now, which is effectively saying really

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Speaker 2: that they think we've got inflation beat, which is something

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Speaker 2: to cheer about as well. It's a bit of a

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Speaker 2: marginal call for a couple of reasons. You know, we

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Speaker 2: haven't got inflation under three yet, three percent, which is

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Speaker 2: into the target range. So you have to be very

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Speaker 2: confident that the economy is now on its knees and

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Speaker 2: flat and all that sort of stuff, that there's nothing

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Speaker 2: else that can happen that except for the inflation to

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Speaker 2: keep falling. So there's that. You know. I've argued that

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Speaker 2: maybe the all the market turmoil and then what's happening

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Speaker 2: in the US is in Japan as a sort of

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Speaker 2: a hook that the Reserve Bank can hang its hat on.

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Speaker 2: But kvy Bank also made the point, Jared Kerr making

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Speaker 2: the point that you know, technically the Reserve Bank still

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Speaker 2: has next August as in its forecast for the first

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Speaker 2: rate cup, so there is a pretty big credibility gap

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Speaker 2: to leap there, you know, if you're going to be

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Speaker 2: talking about cutting next week this August, and I know

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Speaker 2: they didn't change the forecast because they just don't do

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Speaker 2: that at the last monetary policy review, and it does

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Speaker 2: date back to May when things are a bit different.

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Speaker 2: But still, you know, Keevy Bank actually saying that they

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Speaker 2: think they should cut now, but they probably won't because

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Speaker 2: it's just too much of a leap and it would

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Speaker 2: look bad. Now. I don't know, if you're going to

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Speaker 2: save the economy, you've got.

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Speaker 1: To yes, everyone else is going to look really bad.

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Speaker 1: Is if they if they hold onto this until November

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Speaker 1: so that they can actually stand in front of the

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Speaker 1: cameras as opposed to just issue a press release in

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Speaker 1: October or August. If they hold onto it until November

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Speaker 1: and they drive us deeper into the maya that we're in.

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Speaker 1: I mean that looks worse, doesn't it than changing your mind?

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Speaker 2: Yeah, well there's never never There are always terrible choices.

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Speaker 2: But yeah, I mean they could, they could go in October,

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Speaker 2: but they'll be standing in front of the cameras next week.

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Speaker 1: Will they look They've got to go next week? Then,

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Speaker 1: don't they? Because I mean this is what AB is saying.

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Speaker 1: The risk of type monetary policy overshooting has got real.

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Speaker 1: I think we can all see that.

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Speaker 2: Yeah, I mean it was somewhat inevitable. I mean, central

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Speaker 2: banks in monetary policy generally has it works and so

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Speaker 2: we like it because it works, but we know that

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Speaker 2: it's very blunt and it tends to be too much

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Speaker 2: one way. We feel too much stimulus and you see

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Speaker 2: too much and then you know, we argue about whether

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Speaker 2: whether it could have been done better, and well, maybe

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Speaker 2: it could have, but there's a there's a there's a

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Speaker 2: you know, there's an opportunity here. It does look like

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Speaker 2: inflation isn't going anywhere, but down from here it would

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Speaker 2: be a surprise. So if it did bounce back up,

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Speaker 2: but you've got to remember that it would be absolutely

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Speaker 2: disastrous to cut and then have inflation bounce back up.

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Speaker 2: You know, that would just blow on our minds and

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Speaker 2: be too much want to cope of the cycle. So

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Speaker 2: they do, they do have to be sure. But you know,

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Speaker 2: it's funny, it's such a there's so much going on.

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Speaker 2: It's almost like a long long time till Wednesday. You know,

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Speaker 2: if if we see a couple more nights at market

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Speaker 2: turmoil and so forth, that probably would be enough. You know,

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Speaker 2: a lot of the other economists were saying, well, that

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Speaker 2: unemployment number yesterday wasn't bad enough to justify it yet,

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Speaker 2: you know, which is a weird way of looking at it.

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Speaker 2: But it wasn't wasn't worse than expected. It was about

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Speaker 2: being unexpected, so that that might give them some reason

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Speaker 2: to hold on till October. You could end up having

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Speaker 2: to do double cuts at that point.

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Speaker 1: Look, ultimately, they're going to get judged Liam on what

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Speaker 1: we are like when they are finished with this, and

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Speaker 1: that's not going to be good for the mything either way, Liam,

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Speaker 1: it's really really good to talk to you. Thank you

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Speaker 1: about this. Liamdan, the Herald's Business editor at large.

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Speaker 2: For more from Heather Duplessy Allen Drive, listen live to

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