1 00:00:00,040 --> 00:00:03,640 Speaker 1: The OCR down fifty points now three point seventy five. 2 00:00:03,800 --> 00:00:06,360 Speaker 1: Banks are starting to cut their rates mainly though on 3 00:00:06,400 --> 00:00:09,600 Speaker 1: the floatings. Adrian Or who's the governor, made it pretty 4 00:00:09,600 --> 00:00:12,960 Speaker 1: clear today what you can expect and when. 5 00:00:13,160 --> 00:00:15,960 Speaker 2: We are looking at lowering the official cash rate a 6 00:00:16,000 --> 00:00:18,520 Speaker 2: little bit quicker than what we projected back in November, 7 00:00:19,239 --> 00:00:23,520 Speaker 2: but that's around fifty basis points by mid this year, 8 00:00:23,920 --> 00:00:28,240 Speaker 2: around July, and in the document that comes broadly into 9 00:00:28,400 --> 00:00:31,920 Speaker 2: twenty five basis point steps. It doesn't stop there. We 10 00:00:32,280 --> 00:00:36,120 Speaker 2: have our projection of the OCR being around three percent 11 00:00:36,240 --> 00:00:36,879 Speaker 2: by year end. 12 00:00:37,040 --> 00:00:39,960 Speaker 3: Brad Olson's informatric Principal economists Brad Good Evening. 13 00:00:40,600 --> 00:00:41,160 Speaker 4: Good Evening. 14 00:00:41,400 --> 00:00:44,720 Speaker 3: So we're going cutting basically sooner and deeper. 15 00:00:45,520 --> 00:00:48,879 Speaker 4: Why well, Effectively, the Reserve Bank is a lot more 16 00:00:48,880 --> 00:00:52,080 Speaker 4: confident about where it's heading in certainly where it's been 17 00:00:52,200 --> 00:00:55,560 Speaker 4: on the inflation front. I think, you know, hearing from 18 00:00:55,560 --> 00:00:57,720 Speaker 4: the governor at his press conference this afternoon, he was 19 00:00:57,760 --> 00:01:01,560 Speaker 4: pretty chipper about things. Is at two point two percent, 20 00:01:01,600 --> 00:01:04,040 Speaker 4: it's pretty close to that midpoint, and a lot of 21 00:01:04,080 --> 00:01:06,959 Speaker 4: the expectations that the Reserve Bank had for how the 22 00:01:07,000 --> 00:01:09,880 Speaker 4: economy was going to play out is broadly coming true. 23 00:01:09,920 --> 00:01:13,800 Speaker 4: Those inflationary pressures have come back, the economy still in 24 00:01:13,920 --> 00:01:17,400 Speaker 4: a tough position at the moment, and interest rates setting 25 00:01:17,520 --> 00:01:20,080 Speaker 4: still restrictive, and so the Reserve Bank wants to remove 26 00:01:20,120 --> 00:01:24,200 Speaker 4: those restrictions more over time. Long story short, this announcement 27 00:01:24,360 --> 00:01:27,679 Speaker 4: was broadly or very much as expected, the right move 28 00:01:27,760 --> 00:01:31,880 Speaker 4: to cut, the right sort of forecast now with effectively 29 00:01:31,880 --> 00:01:34,640 Speaker 4: the Reserve Bank pricing in what the markets have been 30 00:01:34,680 --> 00:01:38,000 Speaker 4: thinking as well, and so very much a sensible decision 31 00:01:38,040 --> 00:01:39,560 Speaker 4: coming out from the Reserve Bank today. 32 00:01:39,680 --> 00:01:41,880 Speaker 3: They were also saying today, don't get your hopes up 33 00:01:41,920 --> 00:01:44,240 Speaker 3: if you're looking for cuts to your longer term rates, 34 00:01:44,280 --> 00:01:47,520 Speaker 3: your two to five year rates, don't be expecting much 35 00:01:47,520 --> 00:01:48,760 Speaker 3: of a change. 36 00:01:49,240 --> 00:01:51,480 Speaker 4: No, that's right, and even you've just noted it around, 37 00:01:51,560 --> 00:01:53,640 Speaker 4: you know, the focus from the retail banks has been 38 00:01:53,680 --> 00:01:56,400 Speaker 4: at the shorter end, looking at the floating rates, and 39 00:01:56,520 --> 00:01:59,080 Speaker 4: some of those sort of shorter term numbers are the 40 00:01:59,120 --> 00:02:01,960 Speaker 4: longer term rates have actually on a global stage, they've 41 00:02:01,960 --> 00:02:04,680 Speaker 4: been pushing a bit higher because of what's coming out 42 00:02:04,720 --> 00:02:07,559 Speaker 4: of the US and the US economy, and so probably 43 00:02:07,560 --> 00:02:09,320 Speaker 4: not as much of a shift there, I think for 44 00:02:09,400 --> 00:02:11,960 Speaker 4: households as well, though a lot of them are sure 45 00:02:11,960 --> 00:02:14,120 Speaker 4: they might be looking for a few more cuts coming 46 00:02:14,120 --> 00:02:16,079 Speaker 4: through in the system, but for a lot of households, 47 00:02:16,200 --> 00:02:18,520 Speaker 4: they're just looking forward to refixing on to what is 48 00:02:18,600 --> 00:02:21,040 Speaker 4: already a lower interest rate now than what they might 49 00:02:21,080 --> 00:02:24,120 Speaker 4: have been on previously as the year rolls through. And 50 00:02:24,160 --> 00:02:26,320 Speaker 4: so there's I think about half of the mortgage book 51 00:02:26,360 --> 00:02:29,200 Speaker 4: that reprices and has to or could refix in the 52 00:02:29,240 --> 00:02:31,440 Speaker 4: next sort of half a year or so, so a 53 00:02:31,440 --> 00:02:33,920 Speaker 4: lot of that activity coming through. I think what the 54 00:02:33,960 --> 00:02:36,880 Speaker 4: Reserve Bank is signaling is, look, they've had a direction 55 00:02:36,919 --> 00:02:39,000 Speaker 4: that they were moving in. They're a bit more confident 56 00:02:39,040 --> 00:02:41,240 Speaker 4: about doing that a bit quicker. I do worry a 57 00:02:41,280 --> 00:02:44,359 Speaker 4: little bit that maybe they're a little bit too optimistic 58 00:02:44,560 --> 00:02:47,640 Speaker 4: on continuing with that stronger tone. I worry you maybe 59 00:02:47,680 --> 00:02:50,240 Speaker 4: there's a bit more risk on, a bit more pressure 60 00:02:50,240 --> 00:02:52,480 Speaker 4: towards the second half of this year. Not enough to 61 00:02:52,560 --> 00:02:54,760 Speaker 4: deviate from where they are, but just you know, maybe 62 00:02:54,800 --> 00:02:56,960 Speaker 4: a little bit more caut will be warranted. But that's 63 00:02:57,000 --> 00:02:58,840 Speaker 4: for another day. The Reserve Bank has said, look, they 64 00:02:58,840 --> 00:03:01,040 Speaker 4: are continuing to cut. That will come through. It might 65 00:03:01,120 --> 00:03:03,560 Speaker 4: not come through as much for each and every household, 66 00:03:03,800 --> 00:03:06,280 Speaker 4: but it's very much there, and they've got options going forward. 67 00:03:06,400 --> 00:03:08,880 Speaker 3: Yeah, as they keep saying today that it depends on 68 00:03:08,919 --> 00:03:11,240 Speaker 3: the data, doesn't it, So you can always change your mind, Brad. 69 00:03:11,280 --> 00:03:13,840 Speaker 3: Thank you for that, Brad Olsen, Informetric Principle Economists. You're 70 00:03:13,840 --> 00:03:14,960 Speaker 3: on News Talk sad Bet. 71 00:03:15,280 --> 00:03:18,440 Speaker 2: For more from Heather Duplessy Allen Drive. Listen live to 72 00:03:18,560 --> 00:03:21,600 Speaker 2: News Talks it'd be from four pm weekdays, or follow 73 00:03:21,639 --> 00:03:23,400 Speaker 2: the podcast on iHeartRadio.