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Speaker 1: So there is a warning that interest rates could start

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Speaker 1: rising as early as May. The warnings come from Inframetrics

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Speaker 1: Sprad Olson, and he's with us. Happy New Year, Brad,

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Speaker 1: same to you here that Okay, now let me see

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Speaker 1: if I've got this right. You still think most likely

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Speaker 1: it starts rising in November, but there's an outside chance

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Speaker 1: it starts rising as early as May.

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Speaker 2: Yep, that's broadly correct. At the moment, we think the

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Speaker 2: conditions will come through this year. That means that yes,

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Speaker 2: interest rates will have to rise, but not sort of

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Speaker 2: as quickly. But we've sort of highlighted this potential around May,

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Speaker 2: just because after that inflation figure that came out on Friday,

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Speaker 2: we've had a lot of questions from people saying, well,

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Speaker 2: you know, how quickly might things have to adjust? And look,

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Speaker 2: I've had a few people in the business community go, well,

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Speaker 2: does this mean that the February monetary policy statement from

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Speaker 2: the Reserve Bank do they have to you know, whipsaw

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Speaker 2: around that quickly. And that's why we've just wanted to

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Speaker 2: highlight that, No, it won't have to happen that quick

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Speaker 2: You'd need even stronger continue data to come through before

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Speaker 2: the Reserve Bank would make such an abrupt change, and

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Speaker 2: the earliest you'd probably have enough data to sort of

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Speaker 2: convince your South as the bank that they need to

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Speaker 2: move quicker would be made. So that's sort of the

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Speaker 2: start of the bookcase, if you will, and then going

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Speaker 2: all way through the end of this year in terms

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Speaker 2: of potential. But at the moment it does look like

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Speaker 2: it's more that latter half. Regardless though, expectations are clearly

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Speaker 2: starting to become earlier than everyone expected in terms of

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Speaker 2: those interest rate hikes, and that's only on the official

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Speaker 2: cash rate. Actual bank rates for longer term mortgages have

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Speaker 2: already started an increase of touch already this year.

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Speaker 1: How much of your prediction factors in the fact that

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Speaker 1: Anna Brennan is reasonably hawkish.

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Speaker 2: Well, in a sense, we've sort of taken a fairly

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Speaker 2: neutral view there because we haven't heard her speak very

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Speaker 2: directly on New Zealand data and what that means of

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Speaker 2: her observations of the economy and inflation. But we'll hear

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Speaker 2: a lot more of that sort of come February and

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Speaker 2: we will adjust our views then. But I think probably

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Speaker 2: most importantly, when either of you seen inflation outside the

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Speaker 2: target band and the Reserve Bank not starting to have

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Speaker 2: to get going a bit, and probably realistically this view

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Speaker 2: reinforces what we were saying in at least October, if

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Speaker 2: not earlier, that further interest rate cuts below three percent

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Speaker 2: really did start to create an uncomfortable spot where we're

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Speaker 2: probably going to, as we've done the last couple of years,

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Speaker 2: keep overdoing this sort of either stimulus or the contraction

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Speaker 2: that comes from in the economy to try and get

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Speaker 2: us on an even keel. And I dare suspect that

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Speaker 2: if we look back at last year's changes, we probably

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Speaker 2: should have stopped at three because all of those interest

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Speaker 2: rate cuts after that they haven't hit the economy yet.

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Speaker 2: And if we're already at three point one percent, it

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Speaker 2: does make me uncomfortable that that inflationary pressure is already

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Speaker 2: more intense than anyone would like it.

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Speaker 1: Brad, it's good to talk to you, I suppose, despite

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Speaker 1: the topic. Thank you very much, Brad Olsen Informetric's Principle Economists.

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