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Speaker 1: Yesterday there was news. It's been all over the news

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Speaker 1: the last twenty four hours. A Reserve Bank cuts OCR

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Speaker 1: by fifty basis points. And I have had conversations with people,

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Speaker 1: and I'll be honest, I didn't really know what I

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Speaker 1: was saying about it.

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Speaker 2: The general vibe you get is that it's a good thing, yes,

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Speaker 2: and I know that it stands for official cash rap yeah.

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Speaker 3: Yeah.

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Speaker 2: But other than that, I'm like, oh.

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Speaker 1: So, we thought maybe we could ask some what we

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Speaker 1: think might be silly questions, dumb questions to someone who

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Speaker 1: knows all about it, and hopefully they can explain it

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Speaker 1: so we can all learn and we can all have

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Speaker 1: those conversations with a little bit more confidence than I've

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Speaker 1: had over the last twenty four hours.

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Speaker 2: Brad Olson is a chief economist, and he knows what

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Speaker 2: he's talking about, and he is very good at explaining

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Speaker 2: things in movement's terms. Good morning, Brad, How are you well?

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Speaker 1: You got We've got nice to talk to you a lot.

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Speaker 1: We've been struggling all morning wondering how to approach this

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Speaker 1: news about the OCR for the fact that we don't

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Speaker 1: really know entirely what it means other than people keep saying.

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Speaker 2: It's good and we know that it stands for official

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Speaker 2: cash right, Yes.

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Speaker 3: Yeah, I mean I've got a good, good solid start,

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Speaker 3: the good solid start we were.

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Speaker 1: Going with, Okay, so please help us out. What's so,

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Speaker 1: what's happened yesterday? And really like just dumb it down

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Speaker 1: and then dumb it down some more.

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Speaker 3: Okay. So effectively, the Rezono Bank didn't want people to

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Speaker 3: spend as much money because there's too much inflation when

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Speaker 3: all the prices kept going up and up and up,

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Speaker 3: so they raised the official cash rate because basically, the

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Speaker 3: official cash rate is the mortgage rate that your retail

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Speaker 3: bank pays, so as in your beans in there, the

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Speaker 3: OCO is their mortgage rate. So if then mortgage rate

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Speaker 3: comes down, then they can drop your mortgage rate that

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Speaker 3: you pay on your house. And that means that everyone can,

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Speaker 3: if they don't have to pay as much on their mortgage,

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Speaker 3: can spend a bit more money out there in the economy.

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Speaker 2: I have never heard anyone explain it that clearly.

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Speaker 1: Yeah, okay, so that's comes down, So this is good

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Speaker 1: news for people their own houses, right, and what about

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Speaker 1: Wihen you go like to buy things at supermarket things

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Speaker 1: like that doesn't mean prices will come down, or does

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Speaker 1: it mean that people maybe have more money in their

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Speaker 1: account more.

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Speaker 3: That second option, And it's not going to be immediate, right,

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Speaker 3: the Reserve Bank cut the official cash rate yesterday, It's

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Speaker 3: not like everyone goes to refix their mortgage five minutes later.

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Speaker 3: So at some point over the next six, nine, twelve

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Speaker 3: months or so, people will go and refix their mortgage.

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Speaker 3: They'll refix it lower. Therefore they'll won't have to pay

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Speaker 3: quite as much as they did before on the mortgage.

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Speaker 3: They've got a bit more cash left so that they

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Speaker 3: can spend to the shops and do whatever else. Because

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Speaker 3: basically the Reserve Bank said, look, we were spending too

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Speaker 3: much and we were generating too much inflation. They raised interstrates. Therefore,

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Speaker 3: at the moment, we're now not spending enough and no

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Speaker 3: one is raising prices, so we've probably overcooked it too much.

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Speaker 3: On the other side, so now they're saying, actually we

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Speaker 3: need people. We want people to spend a bit more money.

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Speaker 3: They can go and spend a bit more, so we're

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Speaker 3: providing a bit more relief.

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Speaker 2: Here's my question is that because inflation has come down,

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Speaker 2: it's now at three percent, which is quite low considering

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Speaker 2: what it has been everyone, and it's coming up to Christmas,

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Speaker 2: everyone is going to start spending a bit more money.

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Speaker 2: How volatile is it? Like, can OC then go back

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Speaker 2: up again?

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Speaker 3: Technically it could very unlikely at the moment because realistically

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Speaker 3: the OC is still a lot above where it sort

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Speaker 3: of should be to just have sort of normal economic functions.

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Speaker 3: So it's still going to be limiting people. And I

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Speaker 3: think going into Christmas, people are going to be barging

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Speaker 3: hunting a lot because people are still still worried about

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Speaker 3: their jobs, are still worried about how high interest rates are.

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Speaker 3: Someone the other days so said they wouldn't get out

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Speaker 3: of bed for anything less than a seventy percent discount

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Speaker 3: at Brisco, So you know, like it's quite big to

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Speaker 3: get you to spend. So it's good news, but it's

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Speaker 3: not immediately like we're just going to go and run

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Speaker 3: to the shops and spend it up large. It's a

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Speaker 3: bit better than before, but it's not sort of rocket

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Speaker 3: ship to the moon.

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Speaker 1: If we want some banter to say to people in

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Speaker 1: the office today, what's one line that will make us

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Speaker 1: sound like we're smart?

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Speaker 3: Oh, what's what's your pick for Novembers? Osi rcut.

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Speaker 1: Okay, oh okay, I love that.

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Speaker 2: What's your peck?

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Speaker 3: Yeah?

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Speaker 1: What do they said to us?

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Speaker 4: And what's your pack?

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Speaker 1: That we it's tough, it's too hard to say at

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Speaker 1: the stage, or what do you think?

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Speaker 3: Look, my my peck is fifty, but there's an outside

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Speaker 3: charge of seventy five, so much bigger cat to try

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Speaker 3: and stimulate that, we'll spitting again. They didn't really set

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Speaker 3: the pigeons.

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Speaker 1: That's what I was thinking. I was thinking somewhere between

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Speaker 1: fifty and seventy when you mean yeah.

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Speaker 4: Yeah, yeah, they really see the cadet four of the summarison,

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Speaker 4: I thought. But anyway, that was really that the cat

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Speaker 4: was getting into the pigeons. Then, Brad, thank you so

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Speaker 4: much for helping us out this morning. We really do

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Speaker 4: appreciate it.

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Speaker 1: It's a good night to talk to you.

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Speaker 2: There is a trouble in your households

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Speaker 1: Not to do with the OC