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Nick Tuffley: ASB Chief Economist ahead of the new inflation data · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: We get the inflation number out today, economists expecting it
• 0:03
  Speaker 1: to be a slight increase early estimates indicating the annual
• 0:06
  Speaker 1: rate to come in somewhere between two point three two
• 0:08
  Speaker 1: point four. Nick Toughly, chief economist today, ASP's with me.
• 0:11
  Speaker 2: Hi Nick, Good morning.
• 0:13
  Speaker 1: So even if it goes up zero point one percent,
• 0:16
  Speaker 1: would that be enough to worry anyone?
• 0:19
  Speaker 2: Look, we don't think so. What we've got happening is
• 0:23
  Speaker 2: is that domestic part of inflation should for quite substantially
• 0:28
  Speaker 2: in this quarter. But what we're seeing is is just
• 0:30
  Speaker 2: a little bit of a rebound in some of that
• 0:33
  Speaker 2: sort of traded goods inflation, which was a you felt
• 0:36
  Speaker 2: rather quickly last year, and we're just seeing a little
• 0:39
  Speaker 2: bit of bounce in things like food prices and fuel
• 0:42
  Speaker 2: prices went up after helping inflation come down. So we're
• 0:46
  Speaker 2: not too worried if he's a slight blip up. We
• 0:48
  Speaker 2: think it's going to be a factor that will be
• 0:51
  Speaker 2: here for you, say, six months or so of this year,
• 0:53
  Speaker 2: and inflation will settle back down, all right.
• 0:56
  Speaker 1: And you expecting, asps expecting that the RBNZ will oftom
• 1:00
  Speaker 1: out the OCR at two point seven five percent. I
• 1:03
  Speaker 1: see a and Z last night said two point five,
• 1:06
  Speaker 1: what what is the deal with mortgage interest rates? And
• 1:10
  Speaker 1: you know, what are the spot rates doing? Will we
• 1:13
  Speaker 1: see those one, two, even three year rates come down
• 1:17
  Speaker 1: if the ocr keeps dropping or are there other factors
• 1:20
  Speaker 1: at play.
• 1:21
  Speaker 2: Well, there is potential for those rates to come down.
• 1:24
  Speaker 2: I think one thing we've got to be a bit
• 1:26
  Speaker 2: wary of is that some of the term rates have
• 1:28
  Speaker 2: actually been bouncing up at times with what's been happening
• 1:33
  Speaker 2: in the US interest rate market. So there's a lot
• 1:36
  Speaker 2: of volatility at the moment. So hopefully that will settle down.
• 1:40
  Speaker 2: But if we get the cash rate can turn into four,
• 1:43
  Speaker 2: then that should help drive those who are shorter term
• 1:45
  Speaker 2: rates and particularly floating rates down a bit further. So
• 1:49
  Speaker 2: that's the thing with Donald Trump potentially driving inflation down
• 1:54
  Speaker 2: in the longer term a bit in New Zealand if
• 1:56
  Speaker 2: it's a damp and the area export earning, so that
• 1:58
  Speaker 2: gives a reserve bank a bit more scope to cut rates.
• 2:01
  Speaker 2: And then what would have been thought even just a
• 2:03
  Speaker 2: couple of weeks ago.
• 2:04
  Speaker 1: Nick, when do you reckon we'll get to two point
• 2:06
  Speaker 1: seventy five.
• 2:08
  Speaker 2: Look our viewers, if you get three more orderly quarter
• 2:12
  Speaker 2: percent drops. You'll get there by about August. That's if
• 2:15
  Speaker 2: they cut at every single meeting, But I think by
• 2:18
  Speaker 2: the end of this year and they have you at
• 2:21
  Speaker 2: the moment. You know, just trying to do any sort
• 2:22
  Speaker 2: of forecasting is like sort of trying to find a
• 2:24
  Speaker 2: black cat in the dark and the wrong house potentially
• 2:28
  Speaker 2: just given the impacts of Donald Trump. But that's where
• 2:31
  Speaker 2: we see the direction of risk coming through. The Received
• 2:34
  Speaker 2: Bank will respond to whatever plays out internationally and the
• 2:38
  Speaker 2: impacts that will have an our inflation, which is its job.
• 2:40
  Speaker 1: Yeah, it's a pin the tail on the donkey situation
• 2:43
  Speaker 1: at the moment, Nick, Thank you, Nick Tuffley, a spechief
• 2:46
  Speaker 1: economists with us.
• 2:47
  Speaker 2: For more from earlier edition with Ryan Bridge, listen live
• 2:51
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• 2:54
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