Latest / Early Edition with Ryan Bridge / Sharon Zollner: ANZ Chief Economist on the OCR

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Sharon Zollner: ANZ Chief Economist on the OCR · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: Well that ends AI report yesterday was more bad news.
• 0:03
  Speaker 1: Does it mean we get a fifty off today or
• 0:05
  Speaker 1: are we still going with twenty five points? It's ocyr day.
• 0:07
  Speaker 1: Sharon's on the A and Z Chief economist Sharon, good morning,
• 0:11
  Speaker 1: Good morning. What do you I know, what you think
• 0:14
  Speaker 1: they should do, but what do you reckon they'll do.
• 0:18
  Speaker 2: Yeah, we're plumping for a twenty five point cut, but
• 0:20
  Speaker 2: it is looking like a close run thing. It wouldn't
• 0:23
  Speaker 2: be difficult to just fire a larger cut, But at
• 0:26
  Speaker 2: the end of the day, we think, when it's so uncertain,
• 0:28
  Speaker 2: probably go with strategy. And the fact is the rate
• 0:32
  Speaker 2: to come down a long way. We're just heading to
• 0:34
  Speaker 2: the spring period for the housing market. The next six
• 0:36
  Speaker 2: weeks of data are going to tell you a lot
• 0:39
  Speaker 2: about what the rebound looks like. And we think a
• 0:41
  Speaker 2: twenty five point cut while signaling that you're absolutely ready
• 0:45
  Speaker 2: to do what's needed. You've got another meeting in just
• 0:47
  Speaker 2: six weeks. That kind of leaves the most options open.
• 0:50
  Speaker 2: So that's really why we're plumping for twenty five rather
• 0:53
  Speaker 2: than having a strong view about the economics of it,
• 0:56
  Speaker 2: because yeah, the data has been a little bit rubbish.
• 0:59
  Speaker 2: We had obviously that week data for the GENP in
• 1:02
  Speaker 2: the second quarter of the year, that can be very volatile.
• 1:04
  Speaker 2: It can also be revised hugely. But then we had
• 1:08
  Speaker 2: the quarterly Survey Business Opinion yesterday, which is only one
• 1:11
  Speaker 2: indicator for how the economy has gone in the next
• 1:14
  Speaker 2: three months, but it wasn't a particularly good one.
• 1:16
  Speaker 1: Sharing. Isn't this part of the problem that we keep saying, Oh,
• 1:18
  Speaker 1: there's another meeting in six weeks, we'll just wait for
• 1:21
  Speaker 1: more data, wait for more data, and you missed the boat.
• 1:24
  Speaker 2: That's always the risk. You can never eliminate the trade
• 1:27
  Speaker 2: off between exactly that risk of being too slow and
• 1:31
  Speaker 2: then the risk of overshooting or flip flopping and causing
• 1:34
  Speaker 2: unnecessary volatility. Those two risks are ever present. But the
• 1:38
  Speaker 2: fact is, you know, the ocr is a lot closer
• 1:41
  Speaker 2: to its bottom than its top. It's come all the
• 1:44
  Speaker 2: way down from five and a half and an August
• 1:47
  Speaker 2: was that that was forecasting at two and a half
• 1:49
  Speaker 2: it would be the bottom. Maybe it'll be two and
• 1:51
  Speaker 2: a quarter, could even be two. But anyway, the point
• 1:54
  Speaker 2: is we're nearly there. So the driving instructors stay, you
• 1:58
  Speaker 2: should put your foot down, just as your approach for turn.
• 2:01
  Speaker 2: So I guess our assumption is that at risk of
• 2:04
  Speaker 2: other flip flop and overshooting will be higher in the
• 2:08
  Speaker 2: minds of the committee than the risk of being too
• 2:10
  Speaker 2: slow at this point of the cycle. But really, it
• 2:13
  Speaker 2: wouldn't be difficult for them to justify share remove Sharon,
• 2:16
  Speaker 2: they were forecasting it to get to two and a
• 2:17
  Speaker 2: half anyway.
• 2:18
  Speaker 1: They were now very quickly because we've got to go.
• 2:21
  Speaker 1: But I just wanted for people listening to this, We've
• 2:23
  Speaker 1: got a mortgage. If we go fifty instead of twenty
• 2:25
  Speaker 1: five today, what does that actually change for me? Or
• 2:28
  Speaker 1: of these numbers already been priced in.
• 2:32
  Speaker 2: A lot is priced in, but the fifty is not
• 2:34
  Speaker 2: fully priced. So the market's also a bit on the fence,
• 2:37
  Speaker 2: so you'd expect to see the oven. Well, the other
• 2:41
  Speaker 2: night rate will certainly drop more the one year rate.
• 2:43
  Speaker 2: That will depends very much on how the Reserve Bank.
• 2:45
  Speaker 2: It's see what the words they use them, how the
• 2:47
  Speaker 2: market interprets that. Really, I think the Reserve Bank's aim
• 2:50
  Speaker 2: will be to not cause too much of a splash,
• 2:52
  Speaker 2: but that'll be difficult when everyone's got next expectations.
• 2:56
  Speaker 1: Sharon'solm A and Z appreciate your time, Thanks so much
• 2:58
  Speaker 1: for it.
• 3:00
  Speaker 2: More from Early Edition with Ryan Bridge.
• 3:02
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• 3:05
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