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Michael Reddell: Former Reserve Bank Economist ahead of the OCR announcement · The SME Stream

• 0:00
  Speaker 1: Here we go for the final time this year back locally.
• 0:02
  Speaker 1: Of course, oc Arcata is coming most likely fifty points,
• 0:04
  Speaker 1: but the commentary and the monetary policy statements your real gold.
• 0:07
  Speaker 2: Of course.
• 0:08
  Speaker 1: Former Reserve Bank economist Michael Adel's back with us. Michael,
• 0:10
  Speaker 1: very good morning to you, Mike.
• 0:13
  Speaker 2: Fifty oh probably, but if they went seventy five, it
• 0:17
  Speaker 2: certainly wouldn't surprise me. I think it's a reasonable case
• 0:20
  Speaker 2: and making larger to that good.
• 0:22
  Speaker 1: I'm glad somebody else is saying that, apart from Greg Smith.
• 0:24
  Speaker 1: At the moment, what's neutral to you? And how quickly
• 0:27
  Speaker 1: do we get there?
• 0:29
  Speaker 2: I mean, I think the Reserve banks fewer things somewhere
• 0:32
  Speaker 2: three two and a half and three is probably the
• 0:34
  Speaker 2: best guess. At the moment. We won't know. We genuinely
• 0:37
  Speaker 2: won't go in class we've got there and seeing what
• 0:39
  Speaker 2: the inflationary consequences are. But you know, if that's the
• 0:43
  Speaker 2: best guess of the number, I think we'll be there
• 0:45
  Speaker 2: by July August next year.
• 0:47
  Speaker 1: Do do you have any weight on this? We take
• 0:52
  Speaker 1: a very long summer recess off and this is probably
• 0:54
  Speaker 1: not a good thing for the Reserve Bank. And yes,
• 0:56
  Speaker 1: they can hold an emergency meeting, but they don't, et cetera.
• 0:58
  Speaker 1: Is there anything in that or not.
• 1:01
  Speaker 2: I think at the margin it might influence things a little.
• 1:03
  Speaker 2: I mean, it's a bad choice on their part. They
• 1:05
  Speaker 2: should have more even the space their meetings through the year,
• 1:08
  Speaker 2: But much the biggest influence will just be that inflesh
• 1:11
  Speaker 2: is turning now decisively, coming down even the sort of
• 1:14
  Speaker 2: poor inflation measures that don't get so much attention. And
• 1:17
  Speaker 2: I think the Bank will be drawing attention to that
• 1:19
  Speaker 2: themselves today, whether they go fifty or seventy five. And
• 1:22
  Speaker 2: so the fact that they're not coming till February may
• 1:25
  Speaker 2: just make them a little more willing to make a
• 1:28
  Speaker 2: bigger call.
• 1:29
  Speaker 1: Is there any disconnect that you're seeing in the economy?
• 1:32
  Speaker 1: Q four for some anyway is not looking like maybe
• 1:35
  Speaker 1: some thought it would once the cuts started. In other words,
• 1:37
  Speaker 1: the fizz isn't there? Is that a problem?
• 1:41
  Speaker 2: I mean, lags are longer than that, So you wouldn't
• 1:43
  Speaker 2: expect a drop from the ocr to have made observable
• 1:47
  Speaker 2: difference to actually etonolic developments that quickly. Yes, it will
• 1:51
  Speaker 2: come through in the confidence measures, and some of them
• 1:53
  Speaker 2: have been a bit stronger others. Aren't you purchasing managers
• 1:57
  Speaker 2: and DEXes, which are really quite important actually serving terms
• 2:00
  Speaker 2: about what they're doing, are still very, very weak. But
• 2:03
  Speaker 2: again it's not surprising. Rates were high for a long time.
• 2:06
  Speaker 2: Legs take a long time to work. We're still going
• 2:08
  Speaker 2: to see more fiscal consolidation next year, so life's not
• 2:11
  Speaker 2: going to be easy for anyone in the economy.
• 2:13
  Speaker 1: And proberly Well, I was going to say, one of
• 2:15
  Speaker 1: the bank reports I read the other day said one
• 2:16
  Speaker 1: percent growth next year? Is that what you see?
• 2:18
  Speaker 2: Ish? Well, I mean, it's quite plausible. There's always a
• 2:21
  Speaker 2: big margin to there there and you know what happens
• 2:23
  Speaker 2: in the rest of the world. But yeah, any recovery
• 2:25
  Speaker 2: looks like pretty gradual.
• 2:27
  Speaker 1: And how would you describe that? Is that a landing
• 2:29
  Speaker 1: of softish nature, a crash, a what is it?
• 2:33
  Speaker 2: But I don't think it's either of those. It's sort
• 2:35
  Speaker 2: of mid range. You know, we've been very work economics
• 2:37
  Speaker 2: and how two three years its causses on the unemployment
• 2:40
  Speaker 2: rate as it goes to five and a half percent.
• 2:42
  Speaker 2: Obviously that's way better than some of the peaks we've
• 2:44
  Speaker 2: had in the past. It's still tough for job seekers.
• 2:48
  Speaker 2: It's a genuine recession
• 2:50
  Speaker 1: All right, I always appreciate your expertise, Michael Roddell, former
• 2:53
  Speaker 1: Reserve Bank economists, of course,