1 00:00:01,000 --> 00:00:02,279 Speaker 1: Ever do for c ellens. 2 00:00:02,520 --> 00:00:04,120 Speaker 2: All right, So the Reserve Bank is going to make 3 00:00:04,120 --> 00:00:07,160 Speaker 2: the final decision on the OCR tomorrow, and the consensus 4 00:00:07,200 --> 00:00:08,760 Speaker 2: is that it's going to be a cut of fifty 5 00:00:08,800 --> 00:00:11,480 Speaker 2: basis points or half a percent. Paul Bloxham as ahgbc's 6 00:00:11,520 --> 00:00:14,520 Speaker 2: chief economist, Ay, Paul god A, right, do you reckon 7 00:00:14,560 --> 00:00:15,760 Speaker 2: fifty basis points as well? 8 00:00:16,920 --> 00:00:19,200 Speaker 1: Yeah, we do. We think that that's the right balance. 9 00:00:19,840 --> 00:00:22,880 Speaker 1: We think the RBNZ will consider possibly even three options. 10 00:00:22,920 --> 00:00:25,560 Speaker 1: They could look at the economy and say, look, actually, 11 00:00:25,640 --> 00:00:28,160 Speaker 1: conditions are starting to look a little tiny bit better 12 00:00:28,320 --> 00:00:31,560 Speaker 1: just in the recent indicators, and maybe judge that they 13 00:00:31,680 --> 00:00:33,720 Speaker 1: only need to do twenty five. But on the other hand, 14 00:00:33,840 --> 00:00:36,879 Speaker 1: inflations come down a long way, the economy is being 15 00:00:36,920 --> 00:00:39,000 Speaker 1: quite weak for quite some time, and so they could 16 00:00:39,040 --> 00:00:41,479 Speaker 1: even go as far as saying, well, actually, maybe we 17 00:00:41,479 --> 00:00:44,640 Speaker 1: should deliver seventy five. But we think on balance they'll 18 00:00:44,680 --> 00:00:46,800 Speaker 1: net the two out and go, look, fifty basis points 19 00:00:46,880 --> 00:00:48,880 Speaker 1: is the right about the right move for them. It's 20 00:00:49,200 --> 00:00:53,479 Speaker 1: obviously another bigger than usual move and that would reflect 21 00:00:53,520 --> 00:00:56,520 Speaker 1: the fact that inflations come down, growth has been very weak. 22 00:00:56,560 --> 00:00:58,920 Speaker 1: They need to focus on lifting growth from here and 23 00:01:00,200 --> 00:01:02,120 Speaker 1: The other factor, of course, is that they don't have 24 00:01:02,160 --> 00:01:05,240 Speaker 1: another meeting now for three months, so it's more than 25 00:01:05,440 --> 00:01:07,640 Speaker 1: it's double the normal amount of time, So they'd be 26 00:01:07,640 --> 00:01:10,360 Speaker 1: effectively delivering what would be twenty five at each of 27 00:01:10,400 --> 00:01:12,880 Speaker 1: two meetings all together in a fifty basis point move. 28 00:01:12,920 --> 00:01:15,200 Speaker 1: I don't think we can rule out the possibility that 29 00:01:15,240 --> 00:01:17,840 Speaker 1: tomorrow they could do seventy five, but I think fifty 30 00:01:17,920 --> 00:01:19,759 Speaker 1: is more likely, And so yes, that's the camp we're 31 00:01:19,800 --> 00:01:20,280 Speaker 1: in as well. 32 00:01:20,600 --> 00:01:22,960 Speaker 2: How is it even possible to be considering twenty five 33 00:01:23,000 --> 00:01:25,320 Speaker 2: basis point cut when you consider the fact that Treasury 34 00:01:25,319 --> 00:01:27,120 Speaker 2: has just come out and see the economy is worse 35 00:01:27,160 --> 00:01:28,000 Speaker 2: than even they thought. 36 00:01:29,280 --> 00:01:31,000 Speaker 1: Well, we think that they're going to weigh up all 37 00:01:31,000 --> 00:01:33,520 Speaker 1: of these different options in terms of the way they 38 00:01:33,600 --> 00:01:36,119 Speaker 1: look they look at things, and as I say, look, 39 00:01:36,720 --> 00:01:39,679 Speaker 1: our central case is that they are they'll say to themselves, no, 40 00:01:39,800 --> 00:01:41,360 Speaker 1: we need to do a bit more than that. It 41 00:01:41,440 --> 00:01:43,760 Speaker 1: needs to be an outsized move. We haven't got another 42 00:01:43,840 --> 00:01:46,240 Speaker 1: meeting happening for another three months, and so it is 43 00:01:46,400 --> 00:01:48,640 Speaker 1: likely that they'll do one that's a bit bigger than normal, 44 00:01:48,640 --> 00:01:51,240 Speaker 1: So they'll do fifty. But to get yourself into the 45 00:01:51,240 --> 00:01:53,240 Speaker 1: camp of saying they're going to go seventy five. I 46 00:01:53,240 --> 00:01:56,120 Speaker 1: think it's a bit harder because that's a really, really 47 00:01:56,200 --> 00:02:00,680 Speaker 1: large move. And yes, we've got some indications the card 48 00:02:00,760 --> 00:02:02,960 Speaker 1: spending numbers have started to look a little bit better 49 00:02:02,960 --> 00:02:05,080 Speaker 1: in the last couple of months. The housing market, some 50 00:02:05,200 --> 00:02:07,640 Speaker 1: early sales tell source signs that things are starting to stabilize, 51 00:02:07,680 --> 00:02:11,079 Speaker 1: not pick up, just starting to stabilize. The business surveys 52 00:02:11,120 --> 00:02:14,639 Speaker 1: are telling us that businesses are seeing on the horizon 53 00:02:14,680 --> 00:02:16,960 Speaker 1: they can see that. Well, with rate cuts coming, the 54 00:02:17,000 --> 00:02:19,400 Speaker 1: economy looks as though it'll start to turn around. And 55 00:02:19,680 --> 00:02:22,480 Speaker 1: let's keep in mind the main thing that's been suppressing 56 00:02:22,480 --> 00:02:25,320 Speaker 1: the economy has been those interest rate rises that were 57 00:02:25,360 --> 00:02:28,120 Speaker 1: delivered earlier. The elevated level of interest rates has been 58 00:02:28,120 --> 00:02:30,799 Speaker 1: the main thing suppressing things and with purpose to get 59 00:02:30,840 --> 00:02:34,040 Speaker 1: inflation to come down. But as that gets taken away, 60 00:02:34,440 --> 00:02:36,280 Speaker 1: the economy should start to revive. 61 00:02:36,520 --> 00:02:38,560 Speaker 2: Yeah, now, tell me what you read on inflation in 62 00:02:38,600 --> 00:02:40,320 Speaker 2: New Zealand, because I see around the world there are 63 00:02:40,400 --> 00:02:43,120 Speaker 2: still little uptechs that should be causing some concern. 64 00:02:43,960 --> 00:02:45,760 Speaker 1: Well, this is something else to keep in mind, which 65 00:02:45,840 --> 00:02:49,440 Speaker 1: is that primarily so far the disinflation, so inflation coming 66 00:02:49,480 --> 00:02:52,079 Speaker 1: down the extent to which inflation has come down has 67 00:02:52,120 --> 00:02:56,639 Speaker 1: been largely about goods prices coming down. It's been about that. 68 00:02:56,680 --> 00:03:01,000 Speaker 1: It hasn't been services inflation that slowed substantial. There's still 69 00:03:01,120 --> 00:03:04,280 Speaker 1: some domestic pockets of inflation that are still holding up, 70 00:03:04,600 --> 00:03:07,240 Speaker 1: and so this might be just another thing that would 71 00:03:07,280 --> 00:03:11,480 Speaker 1: temper the Arbenz's willingness to deliver an exceptionally large move, 72 00:03:11,600 --> 00:03:14,360 Speaker 1: you know, to go seventy five. So that's another factor 73 00:03:14,360 --> 00:03:16,640 Speaker 1: that we've got in mind, is that, you know, globally, 74 00:03:16,639 --> 00:03:18,360 Speaker 1: look around the world, we're starting to get a few 75 00:03:18,480 --> 00:03:22,359 Speaker 1: little upside surprises for some inflation prints. And the primary 76 00:03:22,360 --> 00:03:24,400 Speaker 1: thing that's been driving things so far has been this 77 00:03:24,480 --> 00:03:27,440 Speaker 1: goods price coming down. Domestic inflation in New Zealand has 78 00:03:27,480 --> 00:03:30,560 Speaker 1: still not quite come down enough to be to be 79 00:03:30,600 --> 00:03:31,440 Speaker 1: completely comfortable. 80 00:03:31,680 --> 00:03:33,760 Speaker 2: Very interesting, Paul, thanks very much, man, appreciate it. Paul 81 00:03:33,760 --> 00:03:37,760 Speaker 2: Block some AGSPC chief economists. For more from Hither duplessy 82 00:03:37,800 --> 00:03:40,600 Speaker 2: Alan Drive, Listen live to news talks. It'd be from 83 00:03:40,680 --> 00:03:44,240 Speaker 2: four pm weekdays, or follow the podcast on iHeartRadio.