Latest / Early Edition with Ryan Bridge / Sharon Zollner: ANZ Chief Economist ahead of today's OCR announcement

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Sharon Zollner: ANZ Chief Economist ahead of today's OCR announcement · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: The official cast rate has had six cuts in a row.
• 0:02
  Speaker 1: Will this end today? It's widely expected to hit pause,
• 0:06
  Speaker 1: but a cut is not off the cards. A and
• 0:08
  Speaker 1: Z and chief economist Sharon's on has got up early
• 0:10
  Speaker 1: for us. Hello Sharon good Running. Two days ago I
• 0:14
  Speaker 1: suggested a cut of twenty five basis points to a
• 0:17
  Speaker 1: flat three might give the morrimond parts of our economy
• 0:21
  Speaker 1: a bit of a g up for summer. Was that
• 0:23
  Speaker 1: a silly idea?
• 0:25
  Speaker 2: No, not at all. In fact, you know we're on
• 0:28
  Speaker 2: record of saying, actually, we think a cut is justified.
• 0:31
  Speaker 2: Wouldn't be a bad idea. What we've seen in a
• 0:33
  Speaker 2: wide range of data actually is that things have just
• 0:35
  Speaker 2: started to roll over a bit in the last few months.
• 0:38
  Speaker 2: And in fact, the reserve banks on shiny new toy,
• 0:41
  Speaker 2: the DVP now indicator, is producing a chance that GDP
• 0:45
  Speaker 2: actually have gone backwards in the last months of this year.
• 0:49
  Speaker 2: So in our mind that kind of more than offsets
• 0:52
  Speaker 2: the fact that GDP in the first three months was
• 0:54
  Speaker 2: stronger than they thought. That we actually think that matters
• 0:56
  Speaker 2: quite a bit. That momentum is play failing little bit
• 1:00
  Speaker 2: at the moment.
• 1:00
  Speaker 1: Can we just talk about that. I've been actually watching
• 1:02
  Speaker 1: that Reserve back now Cast app which is on their website,
• 1:06
  Speaker 1: and it gives a real time indication of GDP and
• 1:09
  Speaker 1: it's saying the economy fell back into contraction in the
• 1:12
  Speaker 1: June quarter. Is that app accurate? Do you think it's
• 1:16
  Speaker 1: readings are real? Are we falling back into contraction?
• 1:20
  Speaker 2: Well, it's not new and so far as it's just
• 1:23
  Speaker 2: rolling together all the indicators the Reserve bankbooks at anyway,
• 1:27
  Speaker 2: but it is kind of in your face, and so
• 1:30
  Speaker 2: you can't rule out that it might impact the committee
• 1:32
  Speaker 2: just by the fact that it's not their official GDP forecast.
• 1:36
  Speaker 2: They have their own forecasters who will take that into account,
• 1:41
  Speaker 2: but everything else as well. But our own forecast is
• 1:44
  Speaker 2: kind of zero point one positive.
• 1:47
  Speaker 1: Sorry, So did you say zero point one?
• 1:50
  Speaker 2: That's what we're our current forecast for the second quarter
• 1:52
  Speaker 2: as a positive.
• 1:55
  Speaker 1: Let's just call the zero amongst friends, shall we?
• 1:57
  Speaker 2: Yeah, exactly. I think that's some timely reasonable. Yeah, So
• 2:00
  Speaker 2: it does look like the economy more or less went
• 2:02
  Speaker 2: nowhere in the last three months that we've just finished.
• 2:04
  Speaker 1: And yet do you think they will not do anything today?
• 2:08
  Speaker 2: Well, they don't have a GDP target, but they don't
• 2:11
  Speaker 2: have an employment target. Either they've got an inflation target.
• 2:14
  Speaker 2: And in May there was one member of the committee
• 2:16
  Speaker 2: who felt pretty strongly they shouldn't have cuts back then,
• 2:20
  Speaker 2: and actually they couldn't reach consensus to cut. They had
• 2:23
  Speaker 2: to hold a vote, which is actually quite unusual. They
• 2:25
  Speaker 2: do prefer to all agree the very Zalan way, but
• 2:28
  Speaker 2: they couldn't. So it's particularly tricky one to call because
• 2:32
  Speaker 2: they're trying to guess not just what a committee will think,
• 2:34
  Speaker 2: but ultimately you know, this one holdout. How are they
• 2:37
  Speaker 2: feeling now? There was a mention in the summary record
• 2:41
  Speaker 2: of meeting last time that it was concerned about inflation
• 2:44
  Speaker 2: expectations and inflation generally, that the lingering inflation could come back,
• 2:50
  Speaker 2: that the members could catch fire again. We can see
• 2:54
  Speaker 2: why those concerns exist. There's certainly sticky parts of inflation,
• 2:58
  Speaker 2: but basically in the bigger picture, we think those concerns
• 3:02
  Speaker 2: will be alleviated rather than will intensify.
• 3:05
  Speaker 1: Well, Charon, thank you so much for your advice today.
• 3:07
  Speaker 1: Certainly it feels like inflation is rusted in. I mean,
• 3:09
  Speaker 1: look at your rates bill.
• 3:10
  Speaker 2: Eh For more from early edition with Ryan Bridge, listen
• 3:14
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• 3:17
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