Latest / Best of Business / Anna Breman: new Reserve Bank Governor on the RBNZ keeping the OCR in place

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Anna Breman: new Reserve Bank Governor on the RBNZ keeping the OCR in place · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talks be follow
• 0:12
  Speaker 1: this and our wide range of podcasts now on iHeartRadio.
• 0:16
  Speaker 2: The new Reserve Bank Governor's made her first big call,
• 0:19
  Speaker 2: Anna Bremens kept the official cash rate at two point
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  Speaker 2: two five percent, and she's with us now Anna, Hello, Hi,
• 0:26
  Speaker 2: was there any consideration other than holding.
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  Speaker 3: At this meeting? There was really full consensus on holding
• 0:33
  Speaker 3: the OCR at this time.
• 0:35
  Speaker 2: How long are you prepared to tolerate inflation being outside
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  Speaker 2: the band?
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  Speaker 3: Well, we always look to exactly why it's inflection outside
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  Speaker 3: of the band. We're not happy with being at three
• 0:46
  Speaker 3: point one percent. We think that is too high, but
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  Speaker 3: we can see that there was some temporary fact mainly
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  Speaker 3: I'm going to be careful, see he's using the word temporary.
• 0:54
  Speaker 3: But we do feel very confident that inflection will fall
• 0:57
  Speaker 3: during twenty twenty six. So that's why we felt comfortable
• 1:02
  Speaker 3: holding the OCR at this time.
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  Speaker 2: What would be an indication to you that I'm not
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  Speaker 2: saying that you've got it wrong, but you may have
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  Speaker 2: got it wrong and that infected sticky than you think. Like,
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  Speaker 2: what's going to be the clue?
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  Speaker 3: Well, if we see inflation being higher than we expect,
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  Speaker 3: overcoming months and later during this year, then again it
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  Speaker 3: will depend on exactly what is causing that. But we
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  Speaker 3: are very focused on bringing inflation back to two percent,
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  Speaker 3: the midpoint of our target band, because we need to
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  Speaker 3: see low and stable inflation. Again, we will not tolerate
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  Speaker 3: inflation outside of the target band.
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  Speaker 2: I am well, for how long though.
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  Speaker 3: Well, it's always a question of exactly what it is
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  Speaker 3: driving inflation, because we base our decisions on where we
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  Speaker 3: see inflation heading. Our goal is really to have inflation
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  Speaker 3: at the midpoint of the target band or the medium term.
• 2:00
  Speaker 3: So if because there's always there can always be temporary
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  Speaker 3: factors that pushes inflation very high or very low, So
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  Speaker 3: we always look for or to where inflation is heading,
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  Speaker 3: but we do not you know, if it is too
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  Speaker 3: high for too long, then of course we'll have to act. Now.
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  Speaker 2: I see that you've been quoted as saying that you
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  Speaker 2: don't want to upset the economic rebound. Is that strictly
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  Speaker 2: part of your job?
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  Speaker 3: Well, what we're saying is that you know, at this time,
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  Speaker 3: we believe that it is important to have a little
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  Speaker 3: bit of an accommodative policy, which means that the OCR
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  Speaker 3: is a little bit lower than it might be in
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  Speaker 3: the longer run, and that is because unless the economy rebounds,
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  Speaker 3: we think that inflation may actually fall below the target.
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  Speaker 3: Because if we look at inflation right now, if you
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  Speaker 3: look at wage growth, if you look at core inflation,
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  Speaker 3: we actually have inflation. Core inflation is firmly within the
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  Speaker 3: target band, and that tends to be a better predictor
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  Speaker 3: of where inflation is going than headline. So in that sense,
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  Speaker 3: you know, we are comfortable that inflation will be a
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  Speaker 3: target in the medium term.
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  Speaker 2: Are you worried at all that households are still too
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  Speaker 2: cautious about spending what money they may have.
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  Speaker 3: I mean, I understand it, because you know, households have
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  Speaker 3: some very tough years behind them. We've had weak growth
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  Speaker 3: we've had and we still have high unemployment. The households
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  Speaker 3: being cautious, I do understand that, But we and we
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  Speaker 3: do understand that households will need to see some better
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  Speaker 3: purchasing power going forward and the stronger labor market. But
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  Speaker 3: that if you look at the economic data right now,
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  Speaker 3: we're getting some positive signals that the economy is starting
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  Speaker 3: to grow, but we are seeing also that we're at
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  Speaker 3: the early stages of the recovery.
• 3:52
  Speaker 2: Are you worried about the I mean recently, which maybe
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  Speaker 2: slightly before your tenure, but late last year the major
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  Speaker 2: bank started to raise the retail rates. Are you worried
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  Speaker 2: about that at all?
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  Speaker 3: We did discuss it because you know, we've seen that
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  Speaker 3: mortgage rates been going up and that is likely affecting
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  Speaker 3: households and how they see the outlook. We're also seen
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  Speaker 3: that house prices have been not growing quite as we expected,
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  Speaker 3: so we do take that into consideration, and we're saying that,
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  Speaker 3: you know, compared to markets, we're seeing the ocr being
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  Speaker 3: on hold for some time, and then we expect when
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  Speaker 3: the economy is getting stronger and we're expecting to see
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  Speaker 3: a bit more inflation or pressures data out and we
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  Speaker 3: will start tightening. But right now we.
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  Speaker 2: Are on hold tightening from December.
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  Speaker 3: Well, you know, we don't say no exactly when because
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  Speaker 3: it will always we will adjust if we see any
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  Speaker 3: changes in the outlook. But we're saying that there is
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  Speaker 3: a probability towards the end of the year of a
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  Speaker 3: rate hike. That's that's correct.
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  Speaker 2: And it's very good to talk to you. Thank you
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  Speaker 2: for your time. It's and a brim and the Reserve
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  Speaker 2: Bank governor the new one.
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