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Jack Tame: Bring on 50 basis points · The SME Stream

• 0:00
  Speaker 1: I went for a walk along cutting a happy road
• 0:02
  Speaker 1: the other night, and I saw something that I had
• 0:04
  Speaker 1: not seen in the longest time. A new restaurant. Yeah,
• 0:09
  Speaker 1: I didn't even step inside, but honestly, it felt like
• 0:11
  Speaker 1: a felt like a drink of cold water for a
• 0:13
  Speaker 1: parched man in the desert. When was the last time
• 0:16
  Speaker 1: I saw a new restaurant. It is, of course a rarity,
• 0:20
  Speaker 1: and hardly a sign by itself that the entire economy
• 0:23
  Speaker 1: is ready to take off. The number of new restaurants
• 0:26
  Speaker 1: in that part of town is still comfortably outnumbered by
• 0:29
  Speaker 1: the number of four lease signs sitting woefully in windows.
• 0:35
  Speaker 1: But as the Reserve Bank prepares for tomorrow's call on
• 0:37
  Speaker 1: the ocr two things give me optimism that they're going
• 0:39
  Speaker 1: to be leaning more towards fifty basis points than twenty five.
• 0:43
  Speaker 1: The first number one is that if the economists are right,
• 0:45
  Speaker 1: and I realize that's always a big gift, well, inflation
• 0:48
  Speaker 1: is already back down within the target band one to
• 0:50
  Speaker 1: three and maybe even closer to two percent than we
• 0:53
  Speaker 1: dare to hope. It occurs to me that migration in
• 0:57
  Speaker 1: flows have really significantly slowed in recent months, and that,
• 1:01
  Speaker 1: in turn is reducing the upward pressure on rents, which
• 1:05
  Speaker 1: was one of the stickier parts of the inflation picture
• 1:07
  Speaker 1: over the last few quarters. So the next CPI data,
• 1:10
  Speaker 1: the next consumer price index comes out next week, so
• 1:13
  Speaker 1: we get the OCR before we get inflation data. But
• 1:17
  Speaker 1: if that's the case, and we are within the target band,
• 1:20
  Speaker 1: and especially if we're somewhere closer to two percent on
• 1:23
  Speaker 1: inflation than three percent, so lower than two point five,
• 1:26
  Speaker 1: I reckon there is a pretty decent argument the Reserve
• 1:29
  Speaker 1: Bank should be moving quickly to get us a whole
• 1:31
  Speaker 1: lot closer to a neutral cash rate. The second point
• 1:34
  Speaker 1: that gives me a bit of optimism is timing. So
• 1:37
  Speaker 1: if this were April, I might feel a little bit
• 1:40
  Speaker 1: more meh. But after tomorrow there is only one OCR
• 1:44
  Speaker 1: core before the summer break, and then it is a
• 1:47
  Speaker 1: long wait until Februy's next decision. It's almost three months,
• 1:50
  Speaker 1: so while waiting to see what comes of the US election,
• 1:53
  Speaker 1: the Reserve Bank might rightly be concerned about being left
• 1:57
  Speaker 1: behind by other central banks around the world that three
• 2:00
  Speaker 1: month break between innings. So the markets say yes to
• 2:04
  Speaker 1: fifty basis points, the banks are saying yes to fifty
• 2:07
  Speaker 1: basis points, is someone refixing his mortgage in three weeks.
• 2:10
  Speaker 1: I say yes. Please check to him