Latest / Early Edition with Ryan Bridge / Kelly Eckhold: Westpac Chief Economist on the OCR

Transcript

Kelly Eckhold: Westpac Chief Economist on the OCR · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: Do the ocr big day for the new Reserve Bank
• 0:02
  Speaker 1: Governor Arna Breman. Today she will reveal her first osier
• 0:05
  Speaker 1: decision as the head of the RBNZ. All signs point
• 0:07
  Speaker 1: to a hold. But then what happens after that? When
• 0:10
  Speaker 1: do we start hiking? That's the question. Will we glean
• 0:13
  Speaker 1: some insight Kelly E Cold Westpac chief economists with us
• 0:15
  Speaker 1: this morning, Kelly, good morning, good morning. So hold today
• 0:19
  Speaker 1: and then you know the isn't the problem that they say, oh,
• 0:22
  Speaker 1: we might hike and I don't know December and then
• 0:24
  Speaker 1: the market price is in a hike in like April.
• 0:29
  Speaker 2: Yeah, well that is the balancing action's got to do here, right,
• 0:32
  Speaker 2: Like the market has already got a bit of a
• 0:35
  Speaker 2: hawkish bank. I've got a couple of hikes christ and
• 0:37
  Speaker 2: for this year already. And she will know that if
• 0:42
  Speaker 2: they're too aggressive, then they'll scare the horses into having
• 0:45
  Speaker 2: people expect that it's all going to happen tomorrow.
• 0:50
  Speaker 1: So fine balancing acts. What do they need to give
• 0:53
  Speaker 1: her a sort of a foward track where she's sort
• 0:54
  Speaker 1: of outline when she started that they would right, yeah,
• 0:58
  Speaker 1: well they're going to.
• 0:58
  Speaker 2: Give us some poor cast they always do, and those
• 1:03
  Speaker 2: I expect will indicate that there's going to be a
• 1:06
  Speaker 2: good chance of a tightening before the end of the year.
• 1:12
  Speaker 2: But you know, important here is I think what the
• 1:14
  Speaker 2: communications is around it. This is government Brevan's first MPs,
• 1:19
  Speaker 2: so we're going to learn a lot about how she
• 1:21
  Speaker 2: thinks about things and sorts of factors that the Reserve
• 1:24
  Speaker 2: Bank thinks are important right now, and crucially just how
• 1:27
  Speaker 2: much confidence that they have in the eclomic recovery that
• 1:31
  Speaker 2: we're seeing a few signs of.
• 1:32
  Speaker 1: Now, what about inflation? You know, because last end of
• 1:36
  Speaker 1: last year everyone was saying to me and to us
• 1:40
  Speaker 1: that we don't worry, we can look through inflation. You know,
• 1:43
  Speaker 1: it's going to be fine. Are we still looking through
• 1:44
  Speaker 1: all this?
• 1:46
  Speaker 2: Yeah? Well that's one of the key questions. I mean,
• 1:49
  Speaker 2: the uncomfortable thing for the Reserve Bank is inflation is
• 1:51
  Speaker 2: above three percent right now. So I mean they're going
• 1:55
  Speaker 2: to be saying to us that inflation is too high
• 1:57
  Speaker 2: because it is one of the things that we're we're
• 2:00
  Speaker 2: all going to be studying quite carefully, is just how
• 2:03
  Speaker 2: comfortable are they going to be with inflation staying above
• 2:08
  Speaker 2: two percent for the sevil future? You know, what does
• 2:11
  Speaker 2: inflation heading back towards two percent, really mean if it's
• 2:16
  Speaker 2: only going to bottom out, it's a two point two,
• 2:19
  Speaker 2: two point three or two point four percent.
• 2:21
  Speaker 1: She did say when quite clearly, and you've got to
• 2:24
  Speaker 1: listen to people when they say things when she came
• 2:27
  Speaker 1: in when she came to New Zealand, she said in look,
• 2:29
  Speaker 1: inflation is my number one job. It is my only job.
• 2:33
  Speaker 2: That's right, she said consistently, she's laser focused on inflation,
• 2:38
  Speaker 2: and in the Reserve banks mandate it only has inflation
• 2:41
  Speaker 2: in the target. So that would logically mean that if
• 2:48
  Speaker 2: this economy is going to recover, then they should shouldn't
• 2:53
  Speaker 2: be happy with keeping interest rates below three percent because
• 2:56
  Speaker 2: those are pretty stimulatory levels. I think kind of like
• 3:01
  Speaker 2: a focus really has to be here on how confident
• 3:04
  Speaker 2: are they in the recovery. When are they going to
• 3:07
  Speaker 2: get confidence that there won't be any extra capacity list
• 3:11
  Speaker 2: of an economy? Is that going to something that's going
• 3:13
  Speaker 2: to take them six months or twelve months to get
• 3:16
  Speaker 2: their heads around?
• 3:17
  Speaker 1: Kelly, appreciate you were update this morning. Kelly a Cold
• 3:20
  Speaker 1: WESTPACTEEF economists. For more from earlier edition with Ryan Bridge,
• 3:24
  Speaker 1: listen live to news Talks. It'd be from five am weekdays,
• 3:28
  Speaker 1: or follow the podcast on iHeartRadio