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Liam Dann: NZ Herald business editor at large on inflation going up higher than predicted · Best of Business

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  Speaker 1: You're listening to a podcast from news Talk. Sa'd be
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  Speaker 1: follow this and our wide range of podcasts now on iHeartRadio.
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  Speaker 2: Now. Inflation has increased slightly more than expected. It came
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  Speaker 2: in at two and a half percent for Q one,
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  Speaker 2: a little bit more than the two point four percent
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  Speaker 2: we were expecting. We spoke to Gareth Kennan from in
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  Speaker 2: Info Metrics about it earlier. It was a little bit
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  Speaker 2: gloomy about our economy. And Liam Dan, the Herald's business
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  Speaker 2: editor at large, is here to be a little bit
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  Speaker 2: more gloomy again, aren't you. Liam.
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  Speaker 3: Yeah, I'm not here to cheer you up.
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  Speaker 2: Sorry, what's the gloomy you're bringing at me?
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  Speaker 3: Well, the inflation. The good news is the inflation's maybe
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  Speaker 3: a bit of a red hearing. I mean, we all
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  Speaker 3: hate it. At the food prices went up. We know
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  Speaker 3: that the cheese and the milk and everything pushed it up,
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  Speaker 3: and that it's got something to do with commodity prices,
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  Speaker 3: and that's good for the economy.
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  Speaker 2: But and the coffee prices, yeah, coffee.
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  Speaker 3: Chocolate, all the good things. But what the reason that
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  Speaker 3: the economists have confidence that inflation isn't coming back to
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  Speaker 3: haunt us unfortunately is because the economy is.
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  Speaker 2: We're all going to get pounders trade war struggling.
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  Speaker 1: Yeah.
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  Speaker 3: Yeah, And so you look at some of the stuff
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  Speaker 3: I read the Infometrics piece obviously. An Z this week
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  Speaker 3: as well had a piece saying they now think the
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  Speaker 3: OCI will have to go to two point five, which
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  Speaker 3: is about fifty basis points lower than they'd said previously.
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  Speaker 3: And you know the sense that the thing about the
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  Speaker 3: A and Z one is that they hadn't even factored
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  Speaker 3: in they're not factoring in the fallout from the trade
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  Speaker 3: wars yet.
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  Speaker 2: So no, this is just how crappy our recovery is.
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  Speaker 3: Well, I guess what, there hasn't been any direct fallout
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  Speaker 3: from the trade wars yet, but the shock to confidence
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  Speaker 3: I think is an issue. So you know, the hit
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  Speaker 3: to the key we say, of the market turmoil, and
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  Speaker 3: if you're a business thinking about what's going to happen,
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  Speaker 3: you know it just our recovery was such a fledgling,
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  Speaker 3: you know, tiny little thing. Finally had this recovery going,
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  Speaker 3: and now to have this big shock to global confidence,
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  Speaker 3: it's really the worst possible timing. So you know, I
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  Speaker 3: would think, you know, we may well, we will probably
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  Speaker 3: see the Reserve Bank go lower, and we've probably got
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  Speaker 3: to see them, I think, go fifty basis points in May,
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  Speaker 3: because we kind of need to get ahead of the
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  Speaker 3: curve before for you know, another gloomy winter.
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  Speaker 2: Yes, but then if they go fifty basis points in May,
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  Speaker 2: you're doing the very thing that everybody says you shouldn't do,
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  Speaker 2: which is overreact to the trade war, right you should? Yeah,
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  Speaker 2: sit tight?
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  Speaker 3: And yeah, I thought about that. I mean May twenty eight,
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  Speaker 3: so we've got a while. I think I think it's
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  Speaker 3: five weeks or thereabouts by that.
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  Speaker 1: You know.
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  Speaker 3: Look, and I hope I'm wrong. I hope things go
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  Speaker 3: really well from here.
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  Speaker 1: Ye.
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  Speaker 3: Yeah, And Donald Trump negotiates with all these countries and
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  Speaker 3: solves everything with China and it doesn't need to happen,
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  Speaker 3: but it doesn't quite feel like that.
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  Speaker 2: Okay. So here's my counter argument to that. Donald Trump
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  Speaker 2: is not an idiot. I mean, you know, regardless of
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  Speaker 2: what you think about him, he's very very He cares
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  Speaker 2: very deeply what happens in the markets and what happens
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  Speaker 2: in the economy. Right, that's the kind of thing that
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  Speaker 2: he measures himself by. So if he sees things starting
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  Speaker 2: to go tit's up. He's not going to go down.
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  Speaker 3: Yeah, he's paused various things and he could, but he
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  Speaker 3: doesn't really care about our economy.
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  Speaker 2: So no, and so but if the war, if the
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  Speaker 2: water economy really takes a hammering, it affects their economy,
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  Speaker 2: doesn't It does?
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  Speaker 3: But we are very vulnerable to China. And look, you know,
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  Speaker 3: good things could happen. You know, people have talked about it.
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  Speaker 3: There's all sorts of effects. But I guess the issue
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  Speaker 3: at the moment is, you know, like we saw it
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  Speaker 3: in the card spending data earlier this week, people have
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  Speaker 3: put their wallets away and that's not supposed to happen.
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  Speaker 3: The interest rates are supposed to come down and they're
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  Speaker 3: supposed to spend more. So you know, I'm reserving judgment
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  Speaker 3: too on the on the tariff that the actual final
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  Speaker 3: fallout from all the tariffs, how it lands, say, you know,
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  Speaker 3: nine months, twelve months from now, but.
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  Speaker 2: What it's doing to our heads as well right now, the.
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  Speaker 3: Chaos and uncertainty is making it very difficult for this
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  Speaker 3: recovery to get going.
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  Speaker 2: Do you reckon it's gone to Nichola Willis's head yet.
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  Speaker 3: Well, she's staying, she's very much, staying calm as she should.
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  Speaker 3: You know, good, good, that's what you want from the leadership.
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  Speaker 3: And she's saying she's going to stick to the script.
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  Speaker 3: There's no room for you know, loosening the fiscal purse
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  Speaker 3: strings yet. But you know, it could go either way
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  Speaker 3: because it's it's again.
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  Speaker 2: It's I mean, she doesn't need to loosen it. They're
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  Speaker 2: loose already. The woman spends more than Grant robertson.
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  Speaker 3: Yeah, but you know, like it is still a constraint
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  Speaker 3: on growth and if this turns into a GFC type scenario.
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  Speaker 3: And I'm looking at some stuff from Fitch today, Fitch
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  Speaker 3: Ratings looking at global growth this year, and they're forecasting
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  Speaker 3: it to be the worst, not counting the first pandemic year,
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  Speaker 3: the worse sin it's twenty two thousand and nine. So
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  Speaker 3: they're talking about global growth coming down to very very
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  Speaker 3: low levels. And yeah, I hope, I certainly hope we
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  Speaker 3: don't have to look at any kind of fiscal stimulus.
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  Speaker 3: I know it's a really bad time for it because
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  Speaker 3: we don't have much room to borrow anymore.
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  Speaker 2: But someone says, you're just depressed because of daylight saving
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  Speaker 2: in winter.
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  Speaker 3: Yeah, I mean and the weather's lousy, that's right, and
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  Speaker 3: we've got a store, so that's always a risk.
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  Speaker 2: Thanksfully, I'm appreciated for.
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