1
00:00:00,240 --> 00:00:03,280
Speaker 1: Go feather due to say has put an extra two

2
00:00:03,320 --> 00:00:06,240
Speaker 1: point one billion dollars in term deposits in July, locking

3
00:00:06,240 --> 00:00:08,239
Speaker 1: in higher interest rates before the Reserve Bank drop the

4
00:00:08,280 --> 00:00:11,000
Speaker 1: official cash right banks now hold a record one hundred

5
00:00:11,039 --> 00:00:13,960
Speaker 1: and thirty six billion dollars in term deposits and genative

6
00:00:14,040 --> 00:00:17,720
Speaker 1: Terrainey is The Herald's Wellington Business editor. Hey you name heya?

7
00:00:18,160 --> 00:00:20,680
Speaker 1: So do you think that record number is as a

8
00:00:20,680 --> 00:00:22,400
Speaker 1: result of people getting in there and trying to lock

9
00:00:22,400 --> 00:00:23,639
Speaker 1: in those higher deposit rates.

10
00:00:24,560 --> 00:00:27,920
Speaker 2: I think it is that term deposit number has been

11
00:00:28,000 --> 00:00:30,560
Speaker 2: tracking up, but I did notice that in July the

12
00:00:30,720 --> 00:00:34,600
Speaker 2: jump in term deposits was quite big. So two point

13
00:00:34,600 --> 00:00:38,000
Speaker 2: one billion dollars that's quite a bit of money, one

14
00:00:38,040 --> 00:00:42,680
Speaker 2: point six percent more than the previous month. And you know,

15
00:00:42,760 --> 00:00:45,080
Speaker 2: I note that in July that's when the Reserve Bank

16
00:00:45,120 --> 00:00:48,680
Speaker 2: released that statement where it suggested it might start cutting

17
00:00:48,720 --> 00:00:52,400
Speaker 2: interest rates sooner than August next year, which you know,

18
00:00:52,560 --> 00:00:55,240
Speaker 2: back in May was when it said it would likely

19
00:00:55,280 --> 00:00:57,600
Speaker 2: cut interest rates. So I mean I was one of

20
00:00:57,600 --> 00:01:00,720
Speaker 2: these people. I thought, on July ten, I better look

21
00:01:00,760 --> 00:01:03,440
Speaker 2: at how my money's going and maybe lock in some

22
00:01:03,880 --> 00:01:06,960
Speaker 2: high interest rates. Now. The thing though, that was quite

23
00:01:07,000 --> 00:01:11,720
Speaker 2: surprising looking at the July figures was that the amount

24
00:01:11,720 --> 00:01:14,640
Speaker 2: of money that people put in their transaction accounts, you know,

25
00:01:14,720 --> 00:01:18,320
Speaker 2: just their call accounts, that also went up, and that

26
00:01:18,400 --> 00:01:20,920
Speaker 2: went up by the most that it's gone up in

27
00:01:21,160 --> 00:01:24,000
Speaker 2: about two and a half years. So not only did

28
00:01:24,000 --> 00:01:26,160
Speaker 2: people put more money in term deposits, but they actually

29
00:01:26,160 --> 00:01:28,280
Speaker 2: put more money into the bank generally.

30
00:01:28,800 --> 00:01:32,120
Speaker 1: Interesting. Yes, So if it's not coming from the transaction

31
00:01:32,280 --> 00:01:34,520
Speaker 1: and the savings account balances, right, if they're not taking

32
00:01:34,520 --> 00:01:37,000
Speaker 1: it out of that here's my easy money account, where

33
00:01:37,000 --> 00:01:38,280
Speaker 1: are they getting this money from?

34
00:01:38,680 --> 00:01:40,759
Speaker 2: Yeah? Well, look that is my big question, and I've

35
00:01:40,800 --> 00:01:43,800
Speaker 2: been doing a big ring around today to ask various people.

36
00:01:44,280 --> 00:01:47,800
Speaker 2: It probably isn't higher welfare or benefit payments because those

37
00:01:48,440 --> 00:01:52,080
Speaker 2: changes are made in April. It probably isn't tax changes

38
00:01:52,120 --> 00:01:56,520
Speaker 2: either because those income tax cuts that we're getting they

39
00:01:56,600 --> 00:01:59,760
Speaker 2: only kick in in August. But what it could be,

40
00:02:00,000 --> 00:02:03,919
Speaker 2: and this is what wespec's former treasurer Jim Reardon said,

41
00:02:04,640 --> 00:02:09,600
Speaker 2: was that back in July, term deposit rates were much

42
00:02:09,639 --> 00:02:12,880
Speaker 2: more attractive than bond yields. So he thought that if

43
00:02:13,000 --> 00:02:15,919
Speaker 2: people there were a bunch of bond maturities at that time,

44
00:02:15,960 --> 00:02:17,840
Speaker 2: So if you received money because you're the bonds you

45
00:02:17,880 --> 00:02:20,520
Speaker 2: invested in matured. You would have been much better off

46
00:02:20,560 --> 00:02:22,920
Speaker 2: putting your money in a term deposit than reinvesting it

47
00:02:22,960 --> 00:02:25,960
Speaker 2: in bonds. So he thought that the fact that the

48
00:02:26,000 --> 00:02:28,160
Speaker 2: bond yields was so much lower than the term deposit

49
00:02:28,240 --> 00:02:30,680
Speaker 2: rates at that point might have pushed more people into,

50
00:02:31,360 --> 00:02:33,840
Speaker 2: you know, not invest in bonds and put the money

51
00:02:33,840 --> 00:02:36,600
Speaker 2: in the bank. But so I think that's, you know,

52
00:02:36,760 --> 00:02:40,320
Speaker 2: quite a plausible thing. I also took to Sharon Zooner,

53
00:02:40,360 --> 00:02:42,800
Speaker 2: the chief economist at A and Z, and she thought,

54
00:02:42,840 --> 00:02:44,960
Speaker 2: you know, things were pretty tough back in July, so

55
00:02:45,160 --> 00:02:48,359
Speaker 2: people were possibly being cautious, you know, worried they might

56
00:02:48,400 --> 00:02:51,640
Speaker 2: lose their jobs, not spending too much, just popping their

57
00:02:51,639 --> 00:02:55,720
Speaker 2: money in the bank. Saving. My big question, and so

58
00:02:55,960 --> 00:02:58,200
Speaker 2: this is also Sharon z Olen's big question is you know,

59
00:02:58,240 --> 00:02:59,799
Speaker 2: there's quite a bit of money that's sitting in the

60
00:02:59,840 --> 00:03:03,359
Speaker 2: bank there, those those balances have been rising in the

61
00:03:03,440 --> 00:03:07,080
Speaker 2: high interest rate environment. You know, how will people deploy

62
00:03:07,120 --> 00:03:10,000
Speaker 2: that money? Is interest rates full and you know, as

63
00:03:10,040 --> 00:03:12,800
Speaker 2: it becomes less appealing to keep your money in the

64
00:03:12,800 --> 00:03:15,840
Speaker 2: bank interesting stuff, Well will they will they put it

65
00:03:15,880 --> 00:03:16,760
Speaker 2: in the property market.

66
00:03:17,320 --> 00:03:19,600
Speaker 1: That's my question, what do you think I'd say, no,

67
00:03:19,840 --> 00:03:21,840
Speaker 1: what do you reckon? Yeah?

68
00:03:21,919 --> 00:03:24,560
Speaker 2: I think they will, but there's quite a lot probably

69
00:03:24,639 --> 00:03:26,919
Speaker 2: holding back. I don't think the pick up will be.

70
00:03:26,960 --> 00:03:28,920
Speaker 1: Nah, I think we know that. Yeah, I think we

71
00:03:28,960 --> 00:03:31,239
Speaker 1: know it. Hey, thank you. Jane has always really appreciated,

72
00:03:31,320 --> 00:03:33,720
Speaker 1: you know, to training. The Heralds are welling to business

73
00:03:33,840 --> 00:03:37,720
Speaker 1: Entity for more from Heather Duplessy Allen Drive. Listen live

74
00:03:37,840 --> 00:03:40,720
Speaker 1: to news talks. It'd be from four pm weekdays, or

75
00:03:40,760 --> 00:03:42,840
Speaker 1: follow the podcast on iHeartRadio.