Latest / Jono, Ben & Megan - The Podcast / How The OCR Affect US!

Transcript

How The OCR Affect US! · Jono, Ben & Megan - The Podcast

• 0:00
  Speaker 1: Yesterday there was news. It's been all over the news
• 0:03
  Speaker 1: the last twenty four hours. A Reserve Bank cuts OCR
• 0:06
  Speaker 1: by fifty basis points. And I have had conversations with people,
• 0:10
  Speaker 1: and I'll be honest, I didn't really know what I
• 0:12
  Speaker 1: was saying about it.
• 0:13
  Speaker 2: The general vibe you get is that it's a good thing, yes,
• 0:16
  Speaker 2: and I know that it stands for official cash rap yeah.
• 0:19
  Speaker 3: Yeah.
• 0:19
  Speaker 2: But other than that, I'm like, oh.
• 0:22
  Speaker 1: So, we thought maybe we could ask some what we
• 0:24
  Speaker 1: think might be silly questions, dumb questions to someone who
• 0:28
  Speaker 1: knows all about it, and hopefully they can explain it
• 0:30
  Speaker 1: so we can all learn and we can all have
• 0:31
  Speaker 1: those conversations with a little bit more confidence than I've
• 0:35
  Speaker 1: had over the last twenty four hours.
• 0:36
  Speaker 2: Brad Olson is a chief economist, and he knows what
• 0:39
  Speaker 2: he's talking about, and he is very good at explaining
• 0:42
  Speaker 2: things in movement's terms. Good morning, Brad, How are you well?
• 0:46
  Speaker 1: You got We've got nice to talk to you a lot.
• 0:48
  Speaker 1: We've been struggling all morning wondering how to approach this
• 0:52
  Speaker 1: news about the OCR for the fact that we don't
• 0:54
  Speaker 1: really know entirely what it means other than people keep saying.
• 0:57
  Speaker 2: It's good and we know that it stands for official
• 0:59
  Speaker 2: cash right, Yes.
• 1:00
  Speaker 3: Yeah, I mean I've got a good, good solid start,
• 1:04
  Speaker 3: the good solid start we were.
• 1:05
  Speaker 1: Going with, Okay, so please help us out. What's so,
• 1:07
  Speaker 1: what's happened yesterday? And really like just dumb it down
• 1:11
  Speaker 1: and then dumb it down some more.
• 1:13
  Speaker 3: Okay. So effectively, the Rezono Bank didn't want people to
• 1:17
  Speaker 3: spend as much money because there's too much inflation when
• 1:19
  Speaker 3: all the prices kept going up and up and up,
• 1:21
  Speaker 3: so they raised the official cash rate because basically, the
• 1:24
  Speaker 3: official cash rate is the mortgage rate that your retail
• 1:27
  Speaker 3: bank pays, so as in your beans in there, the
• 1:30
  Speaker 3: OCO is their mortgage rate. So if then mortgage rate
• 1:34
  Speaker 3: comes down, then they can drop your mortgage rate that
• 1:37
  Speaker 3: you pay on your house. And that means that everyone can,
• 1:40
  Speaker 3: if they don't have to pay as much on their mortgage,
• 1:42
  Speaker 3: can spend a bit more money out there in the economy.
• 1:44
  Speaker 2: I have never heard anyone explain it that clearly.
• 1:48
  Speaker 1: Yeah, okay, so that's comes down, So this is good
• 1:50
  Speaker 1: news for people their own houses, right, and what about
• 1:53
  Speaker 1: Wihen you go like to buy things at supermarket things
• 1:56
  Speaker 1: like that doesn't mean prices will come down, or does
• 1:58
  Speaker 1: it mean that people maybe have more money in their
• 2:00
  Speaker 1: account more.
• 2:01
  Speaker 3: That second option, And it's not going to be immediate, right,
• 2:04
  Speaker 3: the Reserve Bank cut the official cash rate yesterday, It's
• 2:07
  Speaker 3: not like everyone goes to refix their mortgage five minutes later.
• 2:10
  Speaker 3: So at some point over the next six, nine, twelve
• 2:13
  Speaker 3: months or so, people will go and refix their mortgage.
• 2:16
  Speaker 3: They'll refix it lower. Therefore they'll won't have to pay
• 2:19
  Speaker 3: quite as much as they did before on the mortgage.
• 2:21
  Speaker 3: They've got a bit more cash left so that they
• 2:24
  Speaker 3: can spend to the shops and do whatever else. Because
• 2:26
  Speaker 3: basically the Reserve Bank said, look, we were spending too
• 2:29
  Speaker 3: much and we were generating too much inflation. They raised interstrates. Therefore,
• 2:33
  Speaker 3: at the moment, we're now not spending enough and no
• 2:36
  Speaker 3: one is raising prices, so we've probably overcooked it too much.
• 2:39
  Speaker 3: On the other side, so now they're saying, actually we
• 2:41
  Speaker 3: need people. We want people to spend a bit more money.
• 2:43
  Speaker 3: They can go and spend a bit more, so we're
• 2:45
  Speaker 3: providing a bit more relief.
• 2:47
  Speaker 2: Here's my question is that because inflation has come down,
• 2:49
  Speaker 2: it's now at three percent, which is quite low considering
• 2:52
  Speaker 2: what it has been everyone, and it's coming up to Christmas,
• 2:55
  Speaker 2: everyone is going to start spending a bit more money.
• 2:58
  Speaker 2: How volatile is it? Like, can OC then go back
• 3:01
  Speaker 2: up again?
• 3:02
  Speaker 3: Technically it could very unlikely at the moment because realistically
• 3:05
  Speaker 3: the OC is still a lot above where it sort
• 3:08
  Speaker 3: of should be to just have sort of normal economic functions.
• 3:11
  Speaker 3: So it's still going to be limiting people. And I
• 3:14
  Speaker 3: think going into Christmas, people are going to be barging
• 3:16
  Speaker 3: hunting a lot because people are still still worried about
• 3:19
  Speaker 3: their jobs, are still worried about how high interest rates are.
• 3:22
  Speaker 3: Someone the other days so said they wouldn't get out
• 3:24
  Speaker 3: of bed for anything less than a seventy percent discount
• 3:27
  Speaker 3: at Brisco, So you know, like it's quite big to
• 3:29
  Speaker 3: get you to spend. So it's good news, but it's
• 3:32
  Speaker 3: not immediately like we're just going to go and run
• 3:34
  Speaker 3: to the shops and spend it up large. It's a
• 3:36
  Speaker 3: bit better than before, but it's not sort of rocket
• 3:38
  Speaker 3: ship to the moon.
• 3:39
  Speaker 1: If we want some banter to say to people in
• 3:41
  Speaker 1: the office today, what's one line that will make us
• 3:43
  Speaker 1: sound like we're smart?
• 3:45
  Speaker 3: Oh, what's what's your pick for Novembers? Osi rcut.
• 3:48
  Speaker 1: Okay, oh okay, I love that.
• 3:50
  Speaker 2: What's your peck?
• 3:51
  Speaker 3: Yeah?
• 3:51
  Speaker 1: What do they said to us?
• 3:52
  Speaker 4: And what's your pack?
• 3:53
  Speaker 1: That we it's tough, it's too hard to say at
• 3:55
  Speaker 1: the stage, or what do you think?
• 3:57
  Speaker 3: Look, my my peck is fifty, but there's an outside
• 3:59
  Speaker 3: charge of seventy five, so much bigger cat to try
• 4:02
  Speaker 3: and stimulate that, we'll spitting again. They didn't really set
• 4:05
  Speaker 3: the pigeons.
• 4:06
  Speaker 1: That's what I was thinking. I was thinking somewhere between
• 4:08
  Speaker 1: fifty and seventy when you mean yeah.
• 4:10
  Speaker 4: Yeah, yeah, they really see the cadet four of the summarison,
• 4:13
  Speaker 4: I thought. But anyway, that was really that the cat
• 4:15
  Speaker 4: was getting into the pigeons. Then, Brad, thank you so
• 4:18
  Speaker 4: much for helping us out this morning. We really do
• 4:20
  Speaker 4: appreciate it.
• 4:20
  Speaker 1: It's a good night to talk to you.
• 4:23
  Speaker 2: There is a trouble in your households
• 4:26
  Speaker 1: Not to do with the OC