Latest / Early Edition with Ryan Bridge / Sharon Zollner: ANZ Chief Economist ahead of first OCR announcement since Iran war began

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Sharon Zollner: ANZ Chief Economist ahead of first OCR announcement since Iran war began · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: So first OCR decision today post operation epic fury. This
• 0:04
  Speaker 1: is from the rbn Z economists. Reckon they'll hold steady
• 0:06
  Speaker 1: at two point twenty five percent. Sharon zolma A and
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  Speaker 1: Z Chief economs with me this morning. Sharon, good morning,
• 0:12
  Speaker 1: good morning. So crouch and hold today.
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  Speaker 2: Yeah, what else are you going to do? Yeah? Yeah,
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  Speaker 2: it's still actually ambiguous how Mountroy policy should respond to this.
• 0:22
  Speaker 2: It's clearly bad, but it's also clearly inflationary, bad for growth.
• 0:26
  Speaker 2: There is no right answer for Mountry policy really in
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  Speaker 2: the sort of scenario I sort of do no additional
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  Speaker 2: harm is kind of the best you can hope for.
• 0:36
  Speaker 2: So until it's clear whether it's going to require higher
• 0:39
  Speaker 2: interest rates to head off persistent inflation or not, absolutely
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  Speaker 2: the best thing for the Reserve Bank to do is
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  Speaker 2: just stay, wait and see mode.
• 0:48
  Speaker 1: The journist asking about seven percent inflation, I'm assuming they're
• 0:52
  Speaker 1: picking that number because that's how high we got, actually
• 0:55
  Speaker 1: north of seven percent after the COVID years. But is
• 0:59
  Speaker 1: there any reason to think it will go that high?
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  Speaker 2: No? Well, I mean not at this point here and
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  Speaker 2: now today, ask us again tomorrow. You know, we're in
• 1:08
  Speaker 2: that kind of world. We made assumptions just to put
• 1:12
  Speaker 2: something in our updated forecasts, and we came up with
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  Speaker 2: the number. But if you assume the oil price peaks
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  Speaker 2: at one hundred and gradually declines from here, that gives
• 1:20
  Speaker 2: you something like three point six. Now, obviously that's looking
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  Speaker 2: at that hierarque. At this point, it's looking like the
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  Speaker 2: oil price will be higher for longer. We have trumped
• 1:31
  Speaker 2: sending posts that there's going to be civilizational destruction today,
• 1:35
  Speaker 2: So I mean that they're oft in terms of your
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  Speaker 2: forecasting sees your inflation at that point. So it's really
• 1:41
  Speaker 2: absolutely a matter of wait and see. But for the
• 1:44
  Speaker 2: Reserve Bank, it's really not the point how high inflation goes.
• 1:48
  Speaker 2: It's how high it stays, how quickly it comes down,
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  Speaker 2: whether it becomes a medium term problem, or whether people
• 1:55
  Speaker 2: just accept it that it's a one off shift in
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  Speaker 2: the price level and that things will get back normal.
• 2:00
  Speaker 2: That's the key question from where they sit.
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  Speaker 1: And are we somewhat insulated by the fact we haven't
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  Speaker 1: been doing as well over the last few years as
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  Speaker 1: other countries have been.
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  Speaker 2: There's no good time for something like this to happen.
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  Speaker 2: But if you're economy strong, that has advantages but if
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  Speaker 2: your economy has been weak, then you know that's got
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  Speaker 2: some upsides as well. In particular, they're not in a
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  Speaker 2: very frothy time for asset prices. For example, all the
• 2:24
  Speaker 2: heats come out of house prices already, so you know,
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  Speaker 2: the chances of a crash there is obviously lower from
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  Speaker 2: the fact that the starting point is lower. We're not
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  Speaker 2: in the world where firms are going to find it
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  Speaker 2: particularly easy to pass cost increases through the prices. That's
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  Speaker 2: bad news for them, but good news for the Reserve
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  Speaker 2: Bank in terms of keeping in slate, we're not keeping
• 2:47
  Speaker 2: inflation low, but making sure it stays low in the
• 2:49
  Speaker 2: medium term, for example. But yeah, we're seeing different countries
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  Speaker 2: at different points of the cycle. Yeah, being more or
• 2:57
  Speaker 2: less worried about inflation for exactly those kinds of reasons.
• 3:01
  Speaker 2: But it's also true that our official cash rate is
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  Speaker 2: starting from a very low point. So there is a
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  Speaker 2: scenario where the Reserve Bank could decide a little bit
• 3:12
  Speaker 2: sooner than otherwise that maybe they should get it back
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  Speaker 2: to something closer to neutral. We'll have to wait and see.
• 3:17
  Speaker 2: We're still forecasting to send that. But honestly, the range
• 3:20
  Speaker 2: of plausible scenarios is obviously much much wider than it
• 3:24
  Speaker 2: was six weeks ago.
• 3:25
  Speaker 1: And changes on every truth social post from a certain
• 3:29
  Speaker 1: man in the White House, Sharon Zolmer, Ain's chief economists
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  Speaker 1: with us for.
• 3:33
  Speaker 2: More from early edition with Ryan Bridge.
• 3:36
  Speaker 1: Listen live to News Talks it'd be from five am weekdays,
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