Latest / Best of Business / Perspective with Heather du Plessis-Allan: When will the screws on the economy start turning?

Transcript

Perspective with Heather du Plessis-Allan: When will the screws on the economy start turning? · Best of Business

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• 0:17
  Speaker 2: Well, that official cash rate decision today is probably one
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  Speaker 2: of those moments where you find out if you're a
• 0:21
  Speaker 2: glass half full or a glass half empty person, because
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  Speaker 2: on the bright side, the official cash rate didn't go up.
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  Speaker 2: On the downside, it looks like it's definitely going up
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  Speaker 2: next time. So yes, it's a reprieve, but it is
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  Speaker 2: only a reprieve for six weeks. Excuse me before the
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  Speaker 2: screws on the economy start turning again thanks to the
• 0:37
  Speaker 2: new transparency rules at the Reserve Bank, which frankly we
• 0:39
  Speaker 2: should all love. We know that the committee voted and
• 0:42
  Speaker 2: it was split right down the middle. Three of the
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  Speaker 2: committee wanted the OCI to stay at two point twenty
• 0:46
  Speaker 2: five percent. Three of them voted for it to be
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  Speaker 2: raised by twenty five basis points immediately to calm down
• 0:52
  Speaker 2: inflation pressure. But Anna Bremen, who's the governor, has a
• 0:54
  Speaker 2: casting vote. She said it needs to stay, so it
• 0:57
  Speaker 2: stays pot. But they didn't hide the fact that it
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  Speaker 2: is going to go up sooner than they had thought
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  Speaker 2: just three months ago. And it will go up by
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  Speaker 2: more than they thought just three months ago. And much
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  Speaker 2: of it appears to hang off on what businesses do
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  Speaker 2: with prices from here on in, because what the Iran
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  Speaker 2: war is doing to prices is so widespread and so
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  Speaker 2: many prices are going up, from fuel to fertilizer to food,
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  Speaker 2: that it runs a high risk that businesses now start
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  Speaker 2: jacking up more prices in a second round of price rises.
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  Speaker 2: And that is what they're worried about at the Reserve Bank.
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  Speaker 2: And so economists are now calling three hikes in quick
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  Speaker 2: succession from here July September October. Now the here are
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  Speaker 2: two problems with that right. First one, all three hikes
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  Speaker 2: are before the election in November. National especially should be
• 1:39
  Speaker 2: sweating because poorer voters are not happier voters. They are
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  Speaker 2: voters who turn to New Zealand.
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  Speaker 1: First.
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  Speaker 2: The second problem, and this is probably the biggest of
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  Speaker 2: all the problems, is what this is going to do
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  Speaker 2: to our recovery, our economic recovery. We are probably in
• 1:52
  Speaker 2: negative growth this quarter. Next quarter is probably not that
• 1:55
  Speaker 2: flash but at least positive. Entire sectors like construction are
• 1:58
  Speaker 2: still struggling to get back up on their feet. Unemployment
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  Speaker 2: are still in the fives of the Iran War is
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  Speaker 2: still pushing up our fuel prices, ergo pushing up the
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  Speaker 2: prices of everything. So glass half full. Let we get
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  Speaker 2: another six weeks before the screws start turning glass half empty.
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  Speaker 2: When they tighten, they are tightening fast on an economy
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  Speaker 2: that doesn't need that kind of pressure.
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