Latest / Best of Business / Anna Breman: Reserve Bank Governor on the decision to leave the OCR unchanged at 2.25 percent

Transcript

Anna Breman: Reserve Bank Governor on the decision to leave the OCR unchanged at 2.25 percent · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talks at be
• 0:12
  Speaker 1: Follow this and our wide range of podcasts now on
• 0:15
  Speaker 1: iHeartRadio afternoon.
• 0:17
  Speaker 2: The Reserve Bank has kept the official cash right at
• 0:19
  Speaker 2: two point two five percent, but it was a split
• 0:21
  Speaker 2: vote three for holding, three for raising, and it was
• 0:24
  Speaker 2: the Reserve Bank Governor Ana Bremen's casting vote that means
• 0:27
  Speaker 2: it stayed unchanged in Doctor Breman is with us. Now, Hi, Anna, Hi,
• 0:32
  Speaker 2: How sure are you that you have made the right
• 0:35
  Speaker 2: call in holding and not raising.
• 0:38
  Speaker 3: Well, I call confident that we did the right thing
• 0:41
  Speaker 3: at this decision. We do see inflation new term inflation
• 0:47
  Speaker 3: going up, but we also see a weaker economy and
• 0:50
  Speaker 3: we are considering you know how that will flee out
• 0:52
  Speaker 3: over the coming months, and we're completely focused on making
• 0:55
  Speaker 3: sure that inflation returns to target as soon as possible
• 1:00
  Speaker 3: without hurting the economy too much.
• 1:02
  Speaker 2: Is it fair to say that obviously the around war
• 1:04
  Speaker 2: is a significant risk for US and our economic economy
• 1:08
  Speaker 2: and inflation. But the another risk, which is predominantly what
• 1:11
  Speaker 2: you guys seem to be focused on, is what the
• 1:13
  Speaker 2: business is going to do with that second round price increases?
• 1:16
  Speaker 2: Is that fair?
• 1:18
  Speaker 3: That is a very good description, So you know, we
• 1:22
  Speaker 3: do know that. You know, of course, businesses are hurting
• 1:25
  Speaker 3: as well in this and some of them have small
• 1:27
  Speaker 3: margins and they're facing higher costs and some of them
• 1:30
  Speaker 3: will past that on to consumers. Some other can absorb
• 1:34
  Speaker 3: some of those higher costs, and you know, we have
• 1:37
  Speaker 3: to lean in against it getting embedded and getting out
• 1:40
  Speaker 3: of hand, and that's why we say we do expect
• 1:43
  Speaker 3: to increase the OCR atcoming meetings.
• 1:46
  Speaker 2: Are you seeing anything that businesses are doing that is
• 1:48
  Speaker 2: worrying you?
• 1:51
  Speaker 3: So so far, we have relatively little data. So if
• 1:55
  Speaker 3: we look at the data and we're referring to that,
• 1:57
  Speaker 3: you know, core inflation, which is you know, the inflation
• 2:00
  Speaker 3: when we strip out very volatile items is actually still
• 2:03
  Speaker 3: very low. We see wage growth is subdued. We see
• 2:05
  Speaker 3: inflation expectations being you know, the medium and long term
• 2:10
  Speaker 3: are still really well anchored in line with two percent.
• 2:13
  Speaker 3: But we are seeing some cost pressures. We do here
• 2:17
  Speaker 3: that some are using fuel search charges, other are planning
• 2:21
  Speaker 3: on hiking prices. So we will get more information overcoming
• 2:25
  Speaker 3: weeks and months, and that will make it easier for
• 2:28
  Speaker 3: us to assess if we're starting to see those what
• 2:31
  Speaker 3: we call indirect and second round effects, but we haven't
• 2:34
  Speaker 3: seen much yet. That is true. That's also why some
• 2:37
  Speaker 3: of us wanted to be on hold and voted for that.
• 2:39
  Speaker 2: Given what is going on with the fuel increases and
• 2:43
  Speaker 2: we're about to all be hit by another round of
• 2:45
  Speaker 2: rights increases, there can't be much discretionary spending out there,
• 2:49
  Speaker 2: is there.
• 2:51
  Speaker 3: Well, so what we've see now and again, you know,
• 2:55
  Speaker 3: we have some car transaction data, for example, and that
• 2:58
  Speaker 3: is showing that you know, people have to pay more
• 3:01
  Speaker 3: for fuel and they're then cutting back on some other spending,
• 3:06
  Speaker 3: particularly hitting retail and hospitality, and that's all been tough
• 3:11
  Speaker 3: for them over a number of years. But we will
• 3:14
  Speaker 3: see over again. We will get more data overcoming weeks
• 3:17
  Speaker 3: and months, and we're following it very closely.
• 3:20
  Speaker 2: It's not it's not it's not really your job to
• 3:23
  Speaker 2: consider the growth of the economy and the impact that
• 3:25
  Speaker 2: it's going to have on our GDP. But are you.
• 3:29
  Speaker 3: Well so we have to consider growth in the labor
• 3:32
  Speaker 3: market because I will also have an effect on inflation
• 3:35
  Speaker 3: going forward. And it's also very clear if you look
• 3:38
  Speaker 3: at you know, the Reserve Bank Act that you know
• 3:41
  Speaker 3: we aim to keep inflation low and stable, but we
• 3:46
  Speaker 3: should also avoid unnecessary volatility in the economy. So we
• 3:52
  Speaker 3: so we do consider it will take some time to
• 3:55
  Speaker 3: bring inflation back, and we're also taking to consideration how
• 3:59
  Speaker 3: the overall economy involves. But we do need to get
• 4:02
  Speaker 3: inflation back to target in a timely manner.
• 4:05
  Speaker 2: Okay, So if we were bracing ourselves for twenty five
• 4:07
  Speaker 2: bases points in July, twenty five basis points in September,
• 4:10
  Speaker 2: and twenty five basis points in October, would we be wrong.
• 4:14
  Speaker 3: So what we're saying is that it's likely that we'll
• 4:18
  Speaker 3: see OCR hikes atcoming meetings, but we're not being you know,
• 4:23
  Speaker 3: exact how much and what meeting because we will consider,
• 4:29
  Speaker 3: you know, the incoming data data and how the inflation
• 4:33
  Speaker 3: outlook evolves. So if we see oil prices falling really
• 4:38
  Speaker 3: much more than expected, if we see much much weaker growth,
• 4:42
  Speaker 3: then we may not hike. If we see considerably higher
• 4:46
  Speaker 3: infreation and higher evidence of higher second round effects, then
• 4:50
  Speaker 3: we might need to hike more, and we do discuss
• 4:54
  Speaker 3: that in the Monetary Policy statement, But our main projection
• 4:58
  Speaker 3: is that it's likely rate types ofcoming meetings.
• 5:01
  Speaker 2: All right, and I thank you very much, as always
• 5:03
  Speaker 2: for your time. It's en a brem in the Reserve
• 5:04
  Speaker 2: Bank Government's twolp US.
• 5:05
  Speaker 1: Five for more from US talks. It'd be us and
• 5:08
  Speaker 1: live on air or online, and keep our shows with
• 5:11
  Speaker 1: you wherever you go with our podcasts on iHeartRadio