Latest / The SME Stream / Jenee Tibshraeny: NZ Herald Wellington business editor on her first impressions of the new Reserve Bank Governor

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Jenee Tibshraeny: NZ Herald Wellington business editor on her first impressions of the new Reserve Bank Governor · The SME Stream

• 0:00
  Speaker 1: Bryan Bridge, let's go to Jena to training. Media got
• 0:03
  Speaker 1: their first chance to check out the new Reserve Bank
• 0:06
  Speaker 1: governor this morning. Arna Breman is her name hosted a
• 0:08
  Speaker 1: breakfast event for journalists and Janey was there. Jenay, good evening,
• 0:12
  Speaker 1: Hey Ryan, So what was it like? What was she like?
• 0:16
  Speaker 2: Well, she's a serious operator from the Central Bank in Sweden.
• 0:22
  Speaker 2: The thing we were all really interested in today was
• 0:24
  Speaker 2: whether she would try to talk down the market so
• 0:29
  Speaker 2: people might be aware that wholesale interest rates have been
• 0:32
  Speaker 2: rising quite dramatically over the past fortnight since the Reserve
• 0:36
  Speaker 2: Bank cut the ocr and this prompted Westpac yesterday to
• 0:40
  Speaker 2: announce that it was actually increasing some of its longer
• 0:43
  Speaker 2: term mortgage and term deposit rates. So today I went
• 0:46
  Speaker 2: along to the breakfast and thinking it'd be lovely to
• 0:48
  Speaker 2: meet the new governor. But really what I really wanted
• 0:50
  Speaker 2: to know was was she okay with the way the
• 0:53
  Speaker 2: market was going or would she try to talk it down?
• 0:55
  Speaker 2: And she didn't try to talk it down. She's only
• 0:58
  Speaker 2: been in the job for ten days, but she did
• 1:00
  Speaker 2: not try to change the trajectory of those wholesale interest rates.
• 1:05
  Speaker 1: She did say anything, you know, all options are still
• 1:08
  Speaker 1: are always on the table, though. Is that not going
• 1:11
  Speaker 1: far enough? You don't think no.
• 1:13
  Speaker 2: So the market didn't really respond to her comments. So
• 1:18
  Speaker 2: what she said was fairly safe in the sense that
• 1:22
  Speaker 2: she said that you know, she was aware that financial
• 1:25
  Speaker 2: conditions were tightening and should keep an eye on the
• 1:28
  Speaker 2: data as it comes in. So it's quite a long
• 1:31
  Speaker 2: gap between now and when the Reserve Bank next reviews
• 1:33
  Speaker 2: the OCR. That'll be only on February eighteen, so she
• 1:38
  Speaker 2: did have an opportunity to talk it down. But you know,
• 1:41
  Speaker 2: I've just talked to a few people about this, and
• 1:44
  Speaker 2: you know, we're thinking, on the one hand, it would
• 1:46
  Speaker 2: be out of place perhaps if she did swoop on
• 1:49
  Speaker 2: in and talk the market around, especially because these days
• 1:57
  Speaker 2: it's a committee that sets the OCR, that sets moneth policy,
• 2:00
  Speaker 2: it's not just the governor. So she said she hadn't
• 2:03
  Speaker 2: even had a chance to meet all her fellow Monetary
• 2:06
  Speaker 2: Policy Committee members, so maybe it would have been out
• 2:08
  Speaker 2: of hand if she came in and took the market down.
• 2:11
  Speaker 2: On the other hand, the economy still needs support, according
• 2:16
  Speaker 2: to most commentators, so by having these mortgage rates go up,
• 2:20
  Speaker 2: that really potentially does slow our economic recovery.
• 2:24
  Speaker 1: Yeah, I won't yet. No, it's definitely not a great headline,
• 2:29
  Speaker 1: is it if you're the Minister of finance. But I
• 2:31
  Speaker 1: wonder whether because yeah, you just come in, but also
• 2:34
  Speaker 1: with the market reaction, even if she had said something
• 2:36
  Speaker 1: which people might have got, Oh, she's talking it down.
• 2:39
  Speaker 1: She is, as you say, only one on the committee, right,
• 2:41
  Speaker 1: so she gets one vote, just like the rest of them.
• 2:45
  Speaker 2: Yeah, exactly. So you know, back in the day, the
• 2:47
  Speaker 2: governor had all the power and that's not the case now.
• 2:50
  Speaker 2: So perhaps it's it is understandable, you know, but other
• 2:52
  Speaker 2: commentators are quite worried about where things are going. Westpac
• 2:57
  Speaker 2: is the only bank to have moved, but all the
• 2:59
  Speaker 2: banks steal in the same wholesale markets. So the funding
• 3:02
  Speaker 2: pressures that Westpack is under, the other banks are under
• 3:06
  Speaker 2: as well. The interesting thing now to look at is
• 3:09
  Speaker 2: to see, you know, which bank is next, and whether
• 3:12
  Speaker 2: there is some competitive tension. No doubt, the marketing departments
• 3:15
  Speaker 2: at the banks are talking to the you know, financial
• 3:18
  Speaker 2: nerds at the bank's trying to figure out, you know,
• 3:21
  Speaker 2: win might be the best time to announce their mortgage
• 3:25
  Speaker 2: rate hikes. It's not exactly a great headline, No, it's not.
• 3:27
  Speaker 1: And as I said, especially if you're Niola Willison, she's
• 3:30
  Speaker 1: out there saying basically shop around, And I mean, you've
• 3:33
  Speaker 1: got to hope that the banks don't all put their
• 3:35
  Speaker 1: rates up, because then you're shopping around for the same rate.
• 3:38
  Speaker 2: Well, you know, that's the thing. So these the wholesale rates,
• 3:41
  Speaker 2: which are the ones that largely affect the longer term
• 3:44
  Speaker 2: mortgage and term deposit rates, they are now about fifty
• 3:47
  Speaker 2: basis points higher than before the OCR cut. So the
• 3:51
  Speaker 2: result bank cut by twenty five points and the rates
• 3:54
  Speaker 2: are now about fifty points higher than before the cut.
• 3:57
  Speaker 2: So it's not only unwound the effect of the o
• 4:00
  Speaker 2: CR cut, but it's gone even further and that's in
• 4:03
  Speaker 2: the wholesale markets, which affect those long term rates. So, yes,
• 4:07
  Speaker 2: Nichola Willison, Christopher Luxen, who have been rarely milking the
• 4:11
  Speaker 2: whole interest rate cut situation and claiming, you know, claiming
• 4:15
  Speaker 2: it as a victory for themselves slightly wrongly. You know,
• 4:18
  Speaker 2: it's a debateable issue, but they're in a bit of
• 4:21
  Speaker 2: a tight spot now with the rates going up, and
• 4:24
  Speaker 2: definitely the last thing they need.
• 4:26
  Speaker 1: Janet, appreciate your time this evening and your analysis is
• 4:29
  Speaker 1: always generative training. The Herald's Wellington Business editor, who was
• 4:32
  Speaker 1: at the media only breakfast this morning with the new
• 4:37
  Speaker 1: Zoo Bank Governor Arna Brennan. For more from Heather Duplassy
• 4:40
  Speaker 1: Allen Drive Listen live to news Talks. It'd be from
• 4:43
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