Latest / Best of Business / Brad Olsen: Infometrics principal economist on the Reserve Bank keeping the OCR unchanged

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Brad Olsen: Infometrics principal economist on the Reserve Bank keeping the OCR unchanged · Best of Business

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  Speaker 1: You're listening to a podcast from news Talk zed be
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  Speaker 1: follow this and our wide range of podcasts now on iHeartRadio.
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  Speaker 2: Right now, the Reserve Bank keeping the OCR on hold
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  Speaker 2: three point twenty five percent. A pause on our way
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  Speaker 2: down the OCR ladder. You could say, Brad Olsen Infometrics
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  Speaker 2: with us Now.
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  Speaker 3: Hi Brad, good afternoon.
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  Speaker 4: So what is with the pause?
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  Speaker 3: Well, it looks like the Reserve Bank is just a
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  Speaker 3: bit cautious and being careful given all of the uncertainty
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  Speaker 3: in the economy. Now you might think when I say uncertainty,
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  Speaker 3: I mean the global ructions, tariffs and similar but actually
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  Speaker 3: reading this statement from the Reserve Bank today, it seems
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  Speaker 3: are just a little bit more cautious actually about the
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  Speaker 3: likes of inflation, which you're seeing a few bits and
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  Speaker 3: pieces starting to get a bit hotter a bit too quickly,
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  Speaker 3: but also the uncertainty over New Zealand's economic recovery. We
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  Speaker 3: had at the start of this year a good increase
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  Speaker 3: in GDP up point eight percent, but economic indicators since
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  Speaker 3: then have been a lot more challenging. And I think
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  Speaker 3: that's where the Reserve Bank they just one another couple
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  Speaker 3: of months of data to figure out where things are
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  Speaker 3: going before they make their bigot next call over where
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  Speaker 3: to next for interest.
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  Speaker 4: Rates doesn't mean it's good for us, But to be
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  Speaker 4: fair to them, we're at two and a half percent.
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  Speaker 4: Doesn't take your much to notch up, and then you're
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  Speaker 4: close to and you're almost touching, and then before you
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  Speaker 4: know it, you're over.
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  Speaker 3: Well, that's basically what we did last time. We kept
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  Speaker 3: looking at the inflationary numbers and saying, look, they're not
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  Speaker 3: good at the moment, but you know what, looking forward,
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  Speaker 3: they'll they'll be all right. And then by the time
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  Speaker 3: we figured out that they weren't all right, that inflation
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  Speaker 3: was more persistent, things had gotten out of hand. But
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  Speaker 3: I think also for the Reserve Bank, they're also banking
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  Speaker 3: on the fact that interest rates are still down quite
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  Speaker 3: a lot from where they've already been. You know, we've
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  Speaker 3: seen two point two five percentage points lopped off the
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  Speaker 3: ocr over the last year and a bit. That means
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  Speaker 3: that for a lot of people, yes, interest rates are
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  Speaker 3: still they might be paying those high rates, but they
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  Speaker 3: will be refixing at some point over the second half
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  Speaker 3: of this year. A lot of the heavy liftings being done.
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  Speaker 3: But the Reserve Bank kind of now calibrate what's the
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  Speaker 3: right point and to be fear Ryan. They also reckon
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  Speaker 3: that there is more to come. They were quite explicit
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  Speaker 3: today that if things continue to evolve as they broadly expect,
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  Speaker 3: that will give them more scope to continue to cut
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  Speaker 3: the official cash rate this year. I just don't think
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  Speaker 3: there's too much more left in that. There's probably only
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  Speaker 3: a few more tweaks, maybe one or two cuts by
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  Speaker 3: the end of this.
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  Speaker 4: Year, get us down to three two point seventy five
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  Speaker 4: something like that. Brad, appreciate you.
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  Speaker 2: Brad Olson Informetric's principal economists.
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