Latest / Best of Business / Kelly Eckhold: Westpac chief economist on the bank forecasting an OCR increase for September

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Kelly Eckhold: Westpac chief economist on the bank forecasting an OCR increase for September · Best of Business

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  Speaker 1: like no one else. News Talks EDB.
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  Speaker 2: We'll get up learned to you. Yesterday it was A
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  Speaker 2: and Z. Today it's Westpac this time. The bank is
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  Speaker 2: predicting that the ocr could start rising as early as
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  Speaker 2: next month. Now, the most likely case is still September
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  Speaker 2: for Westpac, but May is now a possibility, and the
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  Speaker 2: chief economist Cali echolders with us, Now, Hi, Kelly, Hi,
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  Speaker 2: what's going to tip it towards May?
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  Speaker 3: Well, they're they're looking for indications that the peak and
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  Speaker 3: inflation will be even higher than they currently expect. But
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  Speaker 3: they're also critically looking for any signs that there's going
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  Speaker 3: to be an increase in inflation expectations coming as these
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  Speaker 3: price increases start going through the economics. So that's what
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  Speaker 3: we're pretty focused on.
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  Speaker 2: Now, will they get enough data before May?
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  Speaker 3: It's quite hard to measure a lot of these things.
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  Speaker 3: I mean, they also mention things like wage trends, as well,
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  Speaker 3: but I doubt we'll get any information on wage trends
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  Speaker 3: between now and May. We do get a whole rack
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  Speaker 3: of inflation expectations data that will come about a week
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  Speaker 3: before the meeting, but probably the key information will be
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  Speaker 3: the extent to which we have to revise our CPI
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  Speaker 3: forecast when we get the monthly data, which will come
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  Speaker 3: towards you the next week.
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  Speaker 2: Now, this is coming, this chat that we're having about
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  Speaker 2: the ocr is coming at a time where the straight
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  Speaker 2: of hor moves has been blockaded early this morning, and
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  Speaker 2: now there's talk of a global recession as a result
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  Speaker 2: of that. Is that likely?
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  Speaker 1: Do you think.
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  Speaker 3: That the blockade will continue? And it does feel a
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  Speaker 3: little bit very likely. I mean, both parties still look
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  Speaker 3: like they're fairly far way apart, and neither of them
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  Speaker 3: want to give up their leverage over the situation. In
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  Speaker 3: both cases that leverages enhanced by keeping the straight close.
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  Speaker 2: How much How long does that blockade have to continue
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  Speaker 2: before it tips us into a global recession?
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  Speaker 3: Well, I mean when we mapped out a six month
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  Speaker 3: closure scenario, so that's still a few months down the track.
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  Speaker 3: That's probably going to be sufficient to really cause that
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  Speaker 3: because by then you would probably be seeing oil prices
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  Speaker 3: at pretty high levels. We've already got some pretty severe
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  Speaker 3: Straus site of strain. Now even those spot prices and
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  Speaker 3: futures markets have come off a bit as the ceasefire
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  Speaker 3: has taken place. Is the real shortage of products emerging
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  Speaker 3: if you actually want a barrel of crude oil or
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  Speaker 3: jet fuel right now? So that sort of stuff is
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  Speaker 3: going to increasingly start impact on business decisions or suspect
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  Speaker 3: as we go through in the next few weeks.
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  Speaker 2: All right, So, Kelly, at the moment, up to this point, obviously,
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  Speaker 2: while the strait has been largely closed, there has been
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  Speaker 2: just a trickle of ships coming through headed to places
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  Speaker 2: like India and China. Is it material? What's just happened,
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  Speaker 2: the closure to all ships that none may get through.
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  Speaker 3: Well, I don't think it's very material, but it will
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  Speaker 3: be important, I think for the countries that have been
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  Speaker 3: receiving those shipments. But it's only been a handful of day,
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  Speaker 3: But places like India and especially China were the recipients
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  Speaker 3: of that because it's all sanctioned shipments, so you know,
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  Speaker 3: none of that oil was coming anywhere near the places
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  Speaker 3: that we import or fly and fuels from. But it
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  Speaker 3: does increase the pressure on the Iranians because obviously it
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  Speaker 3: cuts off that sort of income.
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  Speaker 2: Kelly, good to talk to you. Thank you mate. Kelly
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  Speaker 2: are cold westpax Chief Economist.
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