Latest / Best of Business / Liam Dann: NZ Herald business editor at large on what Donald Trump's new tariffs could mean for mortgage rates

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Liam Dann: NZ Herald business editor at large on what Donald Trump's new tariffs could mean for mortgage rates · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talk sed be
• 0:12
  Speaker 1: follow this and our wide range of podcasts now on iHeartRadio.
• 0:16
  Speaker 2: Liam Dan nzid Herald's business editor at large with us
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  Speaker 2: Now Liam, Good evening.
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  Speaker 3: Good day, Ryan.
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  Speaker 2: So all this tariff talk, we're going to talk. We're
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  Speaker 2: going to keep it simple for people tonight and I
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  Speaker 2: need that more than anyone. So what does it mean
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  Speaker 2: for our mortgage rates?
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  Speaker 3: Well, great question. So look, the tariffs, you know, those
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  Speaker 3: direct tariffs. You've heard people talking about the direct tariffs.
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  Speaker 3: We can probably manage them. But the trouble is what
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  Speaker 3: happens to the US economy affects US. So if they
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  Speaker 3: are inflationary for the US economy, and that does look
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  Speaker 3: you know, that's what the markets are expecting. And you
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  Speaker 3: see the US Federal Reserve is unable to cut rates.
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  Speaker 3: They may even worry about inflation and talk about putting
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  Speaker 3: rates up. That puts up the international cost of by
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  Speaker 3: so that the US yields really set the market. So
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  Speaker 3: were that would put upward pressure on borign costs for
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  Speaker 3: our banks, and so you know, you could, I mean
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  Speaker 3: the Reserve Bank could counter that by cutting the OCR
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  Speaker 3: a bit lower, but ultimately that you know that. The
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  Speaker 3: trouble is the US economy is so influential on everything
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  Speaker 3: else that happens in financial markets. So even if New Zealand,
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  Speaker 3: New Zealand's got a lot of work to do to
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  Speaker 3: negotiate this anyway, and we've got our own risks around,
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  Speaker 3: you know, a slowdown because our trading partners a hit
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  Speaker 3: harder and all the rest of it. But you know,
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  Speaker 3: what happens in the US economy will matter too.
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  Speaker 2: Right, let's talk the dollar. What happens with the dollar?
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  Speaker 3: Well, it's been bouncing around all over the place. Today,
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  Speaker 3: it went down and up and down and up and
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  Speaker 3: ended up. It's fifty seven something now, so it's actually
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  Speaker 3: kind of up. So the issue is, on the one hand,
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  Speaker 3: you've got inflationary risk in the US. On the other hand,
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  Speaker 3: you've got people talking about a recession. So you know
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  Speaker 3: which which one is going to sort of which way
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  Speaker 3: is it going to break or are they going to
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  Speaker 3: be stuck with stagflation which is recession and higher inflation,
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  Speaker 3: which should be terrible for everyone too. So look, it's
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  Speaker 3: not one hundred percent clear, cup, but if the inflation,
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  Speaker 3: if it's inflationary in the States, you'd expect that to
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  Speaker 3: keep interest rates up, to keep the US dollar up,
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  Speaker 3: and our dollar would stay low, which actually, you know,
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  Speaker 3: it does help offset things for the our exporters, you know,
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  Speaker 3: the load dollars really helping bring dollars in the New
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  Speaker 3: Zealand dollar terms and keeping us competitive. It's not so
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  Speaker 3: good on the import side, so that could import a
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  Speaker 3: bit of inflation if at a dollar stays low. So
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  Speaker 3: you know, could be facing a bit of inflation pressure
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  Speaker 3: here as well, which again would squeeze the Reserve bank
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  Speaker 3: because it's looking at you know that that trade off
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  Speaker 3: between keeping inflation under control and stopping the economy slowing
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  Speaker 3: down too.
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  Speaker 2: Much, and key we saver run us through it.
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  Speaker 3: Well it's already yeah, kee we savers already looking rough, right,
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  Speaker 3: So you know, we are hugely influenced by Wall Street.
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  Speaker 3: Our funds have a large exposure. I know, I've talked
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  Speaker 3: to some fund managers who are you know, there is
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  Speaker 3: talk about shifting out towards Europe and looking back at
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  Speaker 3: other parts of the world. But really, where Wall Street goes,
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  Speaker 3: everyone sort of follows, and so it's been it's been off,
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  Speaker 3: it's going to be you know, the futures are saying
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  Speaker 3: you're looking at it two to three percent off again tonight.
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  Speaker 3: So yeah, not going to be a great day to
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  Speaker 3: look at your key we saver tomorrow or in the
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  Speaker 3: next next couple of weeks. I guess it's just we
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  Speaker 3: don't know. It is a giant experiment what happens from here,
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  Speaker 3: you know, how much of its negotiation, how those negotiations go,
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  Speaker 3: whether it escalates to a bigger trade war. So, yeah,
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  Speaker 3: there was a it's a rough one. Markets have to,
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  Speaker 3: you know, process that this was a more aggressive starting
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  Speaker 3: point and maybe they had expected they've been in pricing
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  Speaker 3: some of this sin but they'll have to absorb that
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  Speaker 3: and then you know, we hope that doesn't escalate from here,
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  Speaker 3: that if anything, it could be dialed back, but that
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  Speaker 3: remains to be seen. Unfortunately.
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  Speaker 2: Yeah, we're all holding our breadth and hoping that they
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  Speaker 2: it doesn't escalate any further. Dam Thank you very much
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  Speaker 2: for that. Leamed down insid Herald Business editor at Large
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  Speaker 2: on Trump's tariffs announced today.
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