Latest / Best of Business / Liam Dann: NZ Herald business editor at large on the Reserve Bank cutting the OCR down to 4.25 percent

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Liam Dann: NZ Herald business editor at large on the Reserve Bank cutting the OCR down to 4.25 percent · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks'd be follow
• 0:12
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• 0:17
  Speaker 2: The Reserve Bank has cut the official cash rate another
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  Speaker 2: fifty basis points to four point twenty five percent. To
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  Speaker 2: break it all down, we've got Liam dan And Studio
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  Speaker 2: Business Editor at Large for The New Zealand Herald get alamay.
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  Speaker 2: Now was I mean, clearly it wasn't a surprise. A
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  Speaker 2: lot of people predicted the fifty basis point drop. Any
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  Speaker 2: indication from the Reserve Bank about where they may go next.
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  Speaker 3: Yeah, Well, they do publish a new rate track and
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  Speaker 3: new forecasts. I guess it's a little different since their
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  Speaker 3: last August monetary policy statement, but not wildly out of
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  Speaker 3: line with the forecasts and things we've been reading about
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  Speaker 3: the economy. So the economy a little bit shabby, shall
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  Speaker 3: we say, going into the start of twenty twenty five,
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  Speaker 3: seeing a recovery in twenty twenty five, but they haven't
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  Speaker 3: really changed the rate track much, so it's a slightly different.
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  Speaker 3: So that I mean obviously that they see more rate
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  Speaker 3: cuts to come. Most people seem to think there's another
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  Speaker 3: fifty basis points, but it lands around three point five
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  Speaker 3: somewhere around there in the middle of the year, and
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  Speaker 3: they haven't changed that much, and I guess it's kind
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  Speaker 3: of playing it with a straight bat. The market's seen
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  Speaker 3: that is a little bit, you know, perhaps not quite
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  Speaker 3: as dubbish as it might have been. The dollar went
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  Speaker 3: up a little bit, which means that it could have
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  Speaker 3: been they could have been more aggressive around round cutting.
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  Speaker 3: So they've left the pathway pretty clear to go either way,
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  Speaker 3: depending on what happens in the world. For example, you know,
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  Speaker 3: they've they've alluded to a slow down, global slow down,
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  Speaker 3: and of course they won't talk about Donald Trump, but
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  Speaker 3: that's a huge variable coming around. Tariff's and all that
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  Speaker 3: sort of stuff.
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  Speaker 2: Certainly is here.
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  Speaker 4: And of the banks reacted yet.
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  Speaker 3: Well you would have seen probably A and Z moved
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  Speaker 3: their fixed rates last night. But so far it's really
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  Speaker 3: just the what I would call the standard marketing releases.
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  Speaker 3: They say, oh, we've passed it on. Well, of course
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  Speaker 3: you have. You've passed and it's on the floating rate,
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  Speaker 3: so you expect the floating rate to pass through pretty cleanly.
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  Speaker 3: Be something wrong if it didn't, but we haven't seen.
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  Speaker 3: It Usually takes a little bit longer for them to
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  Speaker 3: work do the maths and work out what they're going
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  Speaker 3: to pass through on the fixed rates. But if that
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  Speaker 3: A and Z move last night was any sort of guide,
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  Speaker 3: it's more like sort of twenty basis points or it
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  Speaker 3: won't be the full fifty that comes through on your
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  Speaker 3: fixed rates over this the one year term. Something like that.
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  Speaker 2: Yeah, So for those that have gone on to floating
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  Speaker 2: while they waited for this cut, is their potential for
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  Speaker 2: them to wait a few more weeks to see what
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  Speaker 2: happens or is it's just too hard to tell, and
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  Speaker 2: if you get a good deal from your bank, take it.
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  Speaker 3: It's a very good question, because that's exactly what I did.
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  Speaker 3: I think I'd be expecting something to come through around
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  Speaker 3: my fixed rates in the next few days, and so
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  Speaker 3: I'd imagine I'd be fixing in the next week or
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  Speaker 3: so to get off the higher floating rate. Yeah, there's
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  Speaker 3: another cut coming in February, but then way I do
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  Speaker 3: it is split it into two halves of the mortgage,
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  Speaker 3: so I have another going in April with the other
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  Speaker 3: half of the mortgage. So yeah, yeah, everyone's got their
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  Speaker 3: own strategy, right, Yeah, that's right.
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  Speaker 4: What would have to happen for them not to lower
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  Speaker 4: it again, you say that they're talking about they're talking
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  Speaker 4: about some weird figure like three point four, which isn't
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  Speaker 4: something that you like to.
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  Speaker 3: Yeah, three point fours. It's a hypothetical figure, but they
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  Speaker 3: just plot a graph and they don't really worry about
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  Speaker 3: the reality of it. So that means that it's probably
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  Speaker 3: three point five with some odds on landing at three
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  Speaker 3: point twenty five, which would be yeah, a fifty basis
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  Speaker 3: point cut, and then another twenty five and maybe another
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  Speaker 3: twenty five. Yeah. Well, some of that depends on inflation.
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  Speaker 3: So if inflation was to bounce back or didn't come
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  Speaker 3: off in some of the areas that we're expecting, that
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  Speaker 3: could slow them down. But otherwise it looks more like
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  Speaker 3: you know that the commentary on reading is suggests that
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  Speaker 3: it could actually and don't take this as gospel, but
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  Speaker 3: it could actually go lower, you know. And so capital
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  Speaker 3: economics are based in Singapore. They reckon they'll end up
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  Speaker 3: cutting to two point twenty five or something like that,
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  Speaker 3: which is pretty grim because they wouldn't do that nless
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  Speaker 3: the economy was pretty rough next year.
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  Speaker 4: Yeah, well, that's one of the interesting things because we
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  Speaker 4: all celebrate that the interest rates are going down, but
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  Speaker 4: it isn't actually a big thumbs up for the economy.
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  Speaker 3: No, just just as long as you keep your job.
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  Speaker 3: So yeah, it's all good, as long as your job
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  Speaker 3: isn't the one that.
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  Speaker 2: Yeah, we're going to throw this question out to the
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  Speaker 2: audience very shortly, Liam, But how do you get the
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  Speaker 2: best deal out of your bank? So, I mean, is
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  Speaker 2: it worth negotiating at this point that if you're looking
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  Speaker 2: to refix and you go to your bank, or you're
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  Speaker 2: broke it for that matter, and say, hey, I want
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  Speaker 2: a better deal negotiate for me, is that ever worth it?
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  Speaker 1: Yeah?
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  Speaker 3: See, I'm a terrible person to ask in some respects
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  Speaker 3: because I've been with my bank since I was fourteen,
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  Speaker 3: so I've never really threatened to throw the toys. But
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  Speaker 3: I've only only really, you know, had one mortgage one,
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  Speaker 3: you know. Yeah, look, I mean you get this. You
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  Speaker 3: want to get the special rate. Obviously they do a
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  Speaker 3: special rate for people with a bit of capital in
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  Speaker 3: the house. And then beyond that, I guess, Yeah, like
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  Speaker 3: all negotiations, you've got to be prepared to actually walk away,
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  Speaker 3: don't you, Which you are. Good luck to you. I mean,
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  Speaker 3: it's quite it's quite an effort to switch banks. It's
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  Speaker 3: supposed to be getting easier. That's the whole point of
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  Speaker 3: all this stuff. Yeah, open banking stuff, is that we're
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  Speaker 3: all supposed to be able to switch banks far more easily.
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  Speaker 3: Put a bit more pressure on them to give us
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  Speaker 3: the good deals.
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  Speaker 4: When you go and talk to your bank, do they
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  Speaker 4: do they acknowledge that you're the business editor at large
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  Speaker 4: for the New Zealand Herald and negotiate with you accordingly.
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  Speaker 3: Well, just to the extent that, yeah, one or two
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  Speaker 3: times they've worked it out, and then they just want
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  Speaker 3: to ask me what's going to happen, and you know,
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  Speaker 3: we don't know.
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  Speaker 4: You could use your position say like this is definitely
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  Speaker 4: what's going to happen. So this is the rate you
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  Speaker 4: need to get.
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  Speaker 2: Yeah, yeah, great stuff, Leah. Always good to chat. Thank
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  Speaker 2: you very much. That is Liam Dan, business Editor at
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  Speaker 2: Large for the New Zealand Herald.
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