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Speaker 1: So we've got the new inflation Danta out today. The

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Speaker 1: experts are picking something like two point eight or two

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Speaker 1: point nine for the year, which would be up from

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Speaker 1: two point five. AM's It's chief economist sharings on the back,

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Speaker 1: what are the sharing good morning to you?

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Speaker 2: Good morning?

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Speaker 1: So you're at zero point eight is my understanding for

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Speaker 1: a number of two point nine? If it's two point nine,

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Speaker 1: do we have a thing? Do we have a problem here?

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Speaker 2: Well, we've got a lower house lower income households certainly

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Speaker 2: have a problem because it's concentrated in necessities like food.

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Speaker 2: For example. Altrist is also rising at the moment. But

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Speaker 2: does the Reserve bank have a problem. We don't think so,

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Speaker 2: because if you struck out the stuff they can't do

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Speaker 2: much about, even though they are important to households, the

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Speaker 2: things the reserve Bank can actually influence are looking very benign.

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Speaker 2: The economy is obviously some weeks so we think that

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Speaker 2: within six months in fact, they'll be worrying that inflation

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Speaker 2: being too low. But we do have this uncomfortable period.

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Speaker 1: First, well, when you say period, I mean the stuff

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Speaker 1: you can't do things about insurance rates or that cost

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Speaker 1: plus accounting from councils. I mean that's forever, isn't because

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Speaker 1: they're getting away with it.

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Speaker 2: Well, it's very lagging because part of that will reflects

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Speaker 2: things like construction costs, inflation from the last boom. Now

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Speaker 2: some of these administered prizes just do take quite a

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Speaker 2: long time to catch up. Wage inflation as well would

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Speaker 2: be in there to some extent too. Those things have

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Speaker 2: come back a lot, and so there'll be less pressure

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Speaker 2: on these things going forward. That said, there's some stuff

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Speaker 2: like weather effects and political stuff in there that obviously

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Speaker 2: there is also well beyond anything then dead candn thing.

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Speaker 1: About does it make it acceptable when you say the

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Speaker 1: RB you hold their hands up and go, well, don't

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Speaker 1: look at us. I mean what I'm seeing here, Sharon

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Speaker 1: correct me if I'm wrong, is an economy that's really struggling,

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Speaker 1: and the Reserve Bank's still saying, don't you worry, there's

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Speaker 1: plenty of growth still to come, and we're saying, well,

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Speaker 1: it's July, come on, where is it.

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Speaker 2: It does seem to be taking forever, doesn't it, But

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Speaker 2: it does actually take a really long time. I remember

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Speaker 2: on the other side when the Reserve Bank, when Adrian

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Speaker 2: ll said he was going to deliberately cause a recession.

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Speaker 2: Never heard that. For business confidence absolutely tanks and then

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Speaker 2: it sort of just bounced back over coming months because

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Speaker 2: the sky didn't fall, But it actually did eventually. Of course,

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Speaker 2: it just takes a lot longer on both sides, up

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Speaker 2: and down than people generally expect. So every month more

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Speaker 2: people are rolling over onto lower mortgage spaces. So you know,

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Speaker 2: it won't happen overnight, but it will happen, but it

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Speaker 2: is taking a long time, and our view is actually

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Speaker 2: that the economy just needs a bit more support. We're

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Speaker 2: expecting everyone's expecting another cut in August, that we're actually

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Speaker 2: seeing another one in November, and then potentially even more

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Speaker 2: after that, depending on what happens overseas.

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Speaker 1: John Key said, one hundred basis points too high at

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Speaker 1: the moment, as you write, well, that's a big call.

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Speaker 2: I've seen that people argue that right should be lower.

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Speaker 2: Hundreds of the most extreme I've seen. But there's one

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Speaker 2: member of the MONTROPOLOTOI Committee who's not sure what should

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Speaker 2: be any lower at all. You know, it is clear

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Speaker 2: as mud, as these things tend to be, but it

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Speaker 2: is the Reserve Bank's job to be a little bit

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Speaker 2: more paranoid about inflation than everyone else.

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Speaker 1: Nically, it would be nice to talk to you as always.

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Speaker 1: Shying interrupted Sharon's on to the as chief economist with us

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Speaker 1: this morning infometrics. I notice got two percent growth. Forget

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Speaker 1: the inflation. Two percent growth GDP for next year. So

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Speaker 1: next year, if you're looking forward to twenty twenty six,

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Speaker 1: they're saying two percent because hardly Christmas is it. For

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Speaker 1: more from the Mic Asking Breakfast Listen live to news Talks.

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