Latest / Best of Business / Sharon Zollner: ANZ chief economist on the bank forecasting three OCR hikes before the November election

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Sharon Zollner: ANZ chief economist on the bank forecasting three OCR hikes before the November election · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from news Talk zed B.
• 0:12
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• 0:16
  Speaker 2: The country's biggest bank has increased the number of OCR
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  Speaker 2: hikes it's expecting this year. What was one forecast rate
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  Speaker 2: hike has now become three in July, September, and October.
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  Speaker 2: A z's chief economist, Sharon's owner is with us high
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  Speaker 2: Sharon Good evening, Right, what is going to tip the
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  Speaker 2: Reserve Bank in July? Do you think into a hike?
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  Speaker 3: Well, essentially, I think the starting point for the OCI
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  Speaker 3: is really important. It's just two and a quarter of cent.
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  Speaker 3: The Reserve Bank estimates that neutral is about three. They're
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  Speaker 3: forecasting inflation well, penciling in inflation being at four point
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  Speaker 3: two in Q two. You know, we want there'll still
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  Speaker 3: be a lot of uncertainty about the medium term and
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  Speaker 3: they say that's where their focus is. But in real
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  Speaker 3: time they constantly happen to weigh up the upside and
• 1:01
  Speaker 3: downside risks, the risk of going too soon, going too late,
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  Speaker 3: And essentially, if you're at neutral, that might feel like
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  Speaker 3: a more comfortable place to church and wait and see
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  Speaker 3: how things pan out, as opposed to having supposedly stimulatory
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  Speaker 3: interest rates, but we think any hikes from any level
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  Speaker 3: could be pretty powerful negative for the economy, given sentiment
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  Speaker 3: is so fragile. So in exchange for those earlier hikes,
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  Speaker 3: we now think that the official cash rate will only
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  Speaker 3: have to go to three percent, rather than the three
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  Speaker 3: and a half percent that we were forecasting.
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  Speaker 2: Right, So that was exactly the question I was about
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  Speaker 2: to ask you. So my next question then is over
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  Speaker 2: the weekend, it's been reported that the worst case scenario
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  Speaker 2: for inflation from Treasury on this particular crisis is sitting
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  Speaker 2: at seven point five percent. Does that sound about right
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  Speaker 2: to you?
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  Speaker 3: Well, sort of how long is a piece of string.
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  Speaker 3: There'd have to be a geopolitical expert to take a
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  Speaker 3: punt on how oil high oil prices could go. But
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  Speaker 3: I mean, obviously things are changing day to day, but
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  Speaker 3: I don't see that doesn't strike me as as a
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  Speaker 3: ludicrous number at all for a worst case scenario. We've
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  Speaker 3: been pretty out there for a central thre in a
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  Speaker 3: worst coat scenario, Yeah, that that could happen. I mean
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  Speaker 3: this as of hearing this blockade of the strait. If
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  Speaker 3: it's enormously successful, and then I run counter texts on
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  Speaker 3: the other ways of getting oil out of that region.
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  Speaker 3: Then we are looking at a very severe shortage, and
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  Speaker 3: obviously those prices could move quite a lot more. That's
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  Speaker 3: not our forecast well, but it's for a scenario analysis
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  Speaker 3: that doesn't seem unreasonable.
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  Speaker 2: Sharon has always really appreciate your time. Sharon's on the
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  Speaker 2: A and z's chief economist.
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