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Nick Tuffley: ASB Senior Economist on the Reserve Bank raising the Official Cash Rate to 2.5% · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: So the Reserve Bank this is before obviously Trump, through
• 0:02
  Speaker 1: the ceasefire and the bin. However, yesterday they have hight
• 0:06
  Speaker 1: twenty five basis points up to two and a half
• 0:08
  Speaker 1: percent his art of Bremen.
• 0:09
  Speaker 2: Some of the effects from the conflict are still there
• 0:12
  Speaker 2: and they will linger for some time. So there's a
• 0:14
  Speaker 2: risk here that we get more persistence and inflation.
• 0:17
  Speaker 1: Nick Toughly with us A Spechief Economists, Nick, good morning,
• 0:20
  Speaker 1: Good morning. I mean, this is the thing that you're
• 0:22
  Speaker 1: making judgments and you're making calls and line ball calls
• 0:26
  Speaker 1: in the midst of a war in a very shaky ceasefire.
• 0:30
  Speaker 2: Yes, it doesn't help, and it's one of the things
• 0:34
  Speaker 2: that the Reserve Banks had to grapple worth with the
• 0:36
  Speaker 2: last three decisions that it has made. Where it's done
• 0:39
  Speaker 2: it with this cloud of war and uncertainty hanging over it.
• 0:43
  Speaker 1: So what are they do next? Do you reckon another
• 0:45
  Speaker 1: hike still in September and then crouch, pause and hold
• 0:49
  Speaker 1: and see what happens after the election.
• 0:52
  Speaker 2: Or what we do think the Reserve Bank will steadily
• 0:56
  Speaker 2: lift interest rates over the rest of the year, So
• 0:58
  Speaker 2: that would keet the Reserve Bank and it's cash right
• 1:02
  Speaker 2: back to three hundre quarter percent by the end of
• 1:03
  Speaker 2: the year. But we do think there is a risk
• 1:05
  Speaker 2: that they do pause along the way, but it's having
• 1:08
  Speaker 2: done one and started, we do think it's very lightly
• 1:11
  Speaker 2: that they'll follow through in September and then you know,
• 1:15
  Speaker 2: they can keep looking at the lay of the land
• 1:17
  Speaker 2: and work out the pace of which to titan after that.
• 1:20
  Speaker 1: Because obviously the election is in November, and they're not
• 1:22
  Speaker 1: meant to pay attentions to elect They're meant to be
• 1:25
  Speaker 1: sort of agnostic, who cares, We will do what we
• 1:27
  Speaker 1: will do regardless of an election, But deep down they
• 1:30
  Speaker 1: must have it quite firmly in the back of their mind.
• 1:34
  Speaker 2: Well, at the end of the day, the Reserve Bank's
• 1:37
  Speaker 2: got a clear job to do, and what we have
• 1:39
  Speaker 2: seen in the passes is that the Reserve Bank will
• 1:42
  Speaker 2: do what it thinks is the right thing to do
• 1:44
  Speaker 2: for its inflation target. It's already started lifting interest rates,
• 1:48
  Speaker 2: so you know, any political sensitivity around that, whether to
• 1:51
  Speaker 2: start that or not, is already already out the window.
• 1:53
  Speaker 2: So they'll respond to what they see. By the time
• 1:56
  Speaker 2: you get through to the September window, we'll have had
• 1:58
  Speaker 2: some inflation data. We still won't know how the economy
• 2:01
  Speaker 2: fared over that sort of second quarter which is now
• 2:04
  Speaker 2: just behind us, So they'll also be wanting to see
• 2:06
  Speaker 2: what signs of life we're getting out of the economy,
• 2:09
  Speaker 2: because that's the thing we've hit the pause button. We
• 2:11
  Speaker 2: are seeing some early good signs of consumer confidence, business
• 2:15
  Speaker 2: confidence picking up, but we still won't know quite what
• 2:20
  Speaker 2: that strength of recovery is going to be like and
• 2:22
  Speaker 2: how that will influence inflation as well.
• 2:24
  Speaker 1: Nick toughly Asbee, Chief Economists with us this morning. For
• 2:27
  Speaker 1: more from Early Edition with Ryan Bridge. Listen live to
• 2:30
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• 2:34
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