Latest / Early Edition with Ryan Bridge / Sharon Zollner: ANZ Chief Economist on the OCR likely being cut by 50 basis points

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Sharon Zollner: ANZ Chief Economist on the OCR likely being cut by 50 basis points · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: The Reserve Bank. What are they going to do today?
• 0:02
  Speaker 1: They're expected to cut the OCEA by fifty basis points
• 0:05
  Speaker 1: to three point seventy five percent. It's locked in, they say,
• 0:08
  Speaker 1: as a near certainty, but of course we never know
• 0:11
  Speaker 1: until it actually happens. In the A and ZA chief Economists,
• 0:13
  Speaker 1: Sharon Zohna joins me, Good morning, Sharon, good morning. What's
• 0:17
  Speaker 1: going to happen?
• 0:19
  Speaker 2: We're also in the camp it says our cup fifty.
• 0:21
  Speaker 2: They stickled it really, really unusually clearly in November, which
• 0:25
  Speaker 2: was brave because it was a three month gap until
• 0:27
  Speaker 2: the actual decision. But as it happens, the data has
• 0:30
  Speaker 2: fallen what most peop would consider in line with their
• 0:34
  Speaker 2: four cuts, a few unders and overs, but overall not
• 0:36
  Speaker 2: challenging their narratives. So you're seeing quite a strong consensus
• 0:39
  Speaker 2: amongst both economists and market participants at they'll cup fifty today.
• 0:43
  Speaker 1: Well there's a few we're around saying don't cut it,
• 0:45
  Speaker 1: or just to zero point twenty five. Because food prices
• 0:47
  Speaker 1: are rising. In January, non tradable inflations, baked in American
• 0:50
  Speaker 1: inflations ticking up, is a possibility of a global trade war.
• 0:54
  Speaker 1: We've got global instability affecting supply chains. There's some very
• 0:57
  Speaker 1: real arguments to ty hoe.
• 1:00
  Speaker 2: There are there some very real arguments to be cautious
• 1:03
  Speaker 2: about the medium term outlook. But basically, what happens to
• 1:06
  Speaker 2: that domestic sticky inflation that the Reserve Bank really cares
• 1:10
  Speaker 2: about depends on where the economy was that sort of
• 1:12
  Speaker 2: six months ago, really, and six months ago the economy
• 1:15
  Speaker 2: was in a pretty dark place. So it's reasonably it's
• 1:19
  Speaker 2: even for the Reserve Bank to expect that domestic sensation
• 1:22
  Speaker 2: to continue to fall. And they don't want to overdo things.
• 1:25
  Speaker 2: I want to cause unnecessary pain, but also they want
• 1:27
  Speaker 2: to cause inflation to go out the bottom of the band.
• 1:30
  Speaker 2: So that's why they're comfortable cutting now. But they have
• 1:32
  Speaker 2: suggested that they will start to move more cautiously as
• 1:36
  Speaker 2: they get closer to neutral. So that's where it starts
• 1:39
  Speaker 2: to get interesting. Sidney five, which is where they'd be
• 1:42
  Speaker 2: after a fifty point cut. Is that closer to neutral?
• 1:45
  Speaker 2: All the next move the twenty five or fifty There
• 1:48
  Speaker 2: is some debate on that point.
• 1:50
  Speaker 1: Yeah, well, how low could they go? You're quite right.
• 1:52
  Speaker 1: The debate is between some people saying three point five
• 1:55
  Speaker 1: that'll be about it. Some people have said or it
• 1:57
  Speaker 1: could go as lot as three. What do you think, Yeah, some.
• 2:00
  Speaker 2: People are saying loud than that. I don't think the
• 2:03
  Speaker 2: Reserve Bank will necessarily feel the need to be dogmatic
• 2:06
  Speaker 2: about exactly where the OCR funishes up today. But their
• 2:10
  Speaker 2: last forecast suggested the OCL we go down to about three,
• 2:14
  Speaker 2: and I guess the market's probably assuming that they'll show
• 2:17
  Speaker 2: something similar today. If they show it going there only slowly,
• 2:21
  Speaker 2: you could see some disappointments from the market in which
• 2:24
  Speaker 2: tests you could actually see a little bump up and
• 2:26
  Speaker 2: in illestrates and exchange rates even though they're cutting. On
• 2:29
  Speaker 2: the other hand, if the market thinks they sound like
• 2:32
  Speaker 2: they're going to cut faster, you could still see reaction.
• 2:34
  Speaker 2: So even though they're cutting, the actual reaction on the
• 2:38
  Speaker 2: day will depend on what they say, their tone, their
• 2:41
  Speaker 2: forecast compared to what the market is expecting.
• 2:43
  Speaker 1: Well, I'm looking forward to what they have to say
• 2:45
  Speaker 1: and what they have to say about our economy right now.
• 2:47
  Speaker 1: Share It's always great that you wake up for us,
• 2:49
  Speaker 1: and I thank you. Sharon Designer is the A and
• 2:51
  Speaker 1: Z Chiefs Economy Chief Economists.
• 2:54
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• 2:57
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• 3:00
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