Latest / Best of Business / Perspective with Heather du Plessis-Allan: The inflation fight is over, but the economy still suffers

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Perspective with Heather du Plessis-Allan: The inflation fight is over, but the economy still suffers · Best of Business

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  Speaker 1: due to see.
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  Speaker 2: How good is that inflation number out today? Two point
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  Speaker 2: two percent? We're there, baby, I've got the thing beat
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  Speaker 2: pretty much bang on. We're Inflation's supposed to sit at
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  Speaker 2: two percent, which is exactly halfway between one and three
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  Speaker 2: in the target band. So we have made it. Got inflation,
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  Speaker 2: whi's been out of control in this country for three years,
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  Speaker 2: finally back to where it's supposed to be. And I
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  Speaker 2: think that that is absolutely reason to celebrate, isn't it?
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  Speaker 2: Isn't that good? We're there, However, got a little problem
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  Speaker 2: on our hands, which is the Reserve Bank, and I
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  Speaker 2: think we need to talk about how badly these guys
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  Speaker 2: have stuffed the situation up. I am stoked and very
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  Speaker 2: very very excited that we're at two point two percent today,
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  Speaker 2: but that number is also, unfortunately a pretty clear signal
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  Speaker 2: of how badly the Reserve Bank has stuffed this up,
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  Speaker 2: because look at where the official cash rate is still sitting.
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  Speaker 2: It's still at four point seventy five percent, So we've
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  Speaker 2: got inflation excitly where we want it, and yet we've
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  Speaker 2: got an official cash rate that is higher than what
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  Speaker 2: the Aussies have. Now, explain that to me, because our
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  Speaker 2: inflation is where it's supposed to be, almost bang on.
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  Speaker 2: Our OCR is sitting at four point seventy five percent,
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  Speaker 2: Australia's inflation is still out of control. Their OCR is
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  Speaker 2: lower than ours at four point three five percent. How
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  Speaker 2: does that happen? That happens because our Reserve Bank overdid it.
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  Speaker 2: They overdid it when they hike when they were pumping
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  Speaker 2: the money in to the system, and then they overdid
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  Speaker 2: it and they started raising the official cash rate and
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  Speaker 2: they can't get it down fast enough. They're trying very
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  Speaker 2: hard to get it down fast. They're dropping the official
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  Speaker 2: cash rate faster now than they expect it to and
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  Speaker 2: I reckon they're going to have to go even faster.
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  Speaker 2: Watch the number of economists now line up to save
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  Speaker 2: fifty basis point cut November is not going to be enough.
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  Speaker 2: I mean, a few months ago we thought fifty basis
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  Speaker 2: points was a crazy idea. Now we're talking about the
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  Speaker 2: possibility of seventy five in the next month. Because we
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  Speaker 2: need to get that OCR down fast. Because the thing
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  Speaker 2: is the longer that it stays as high as it
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  Speaker 2: is right now, the more people will lose their jobs,
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  Speaker 2: more people will lose their houses, the more people will
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  Speaker 2: lose their businesses. That is the cost of the Reserve
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  Speaker 2: Bank making a mistake. The Reserve Bank doesn't get latitude
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  Speaker 2: like the rest of us do. Right. Worst case scenario,
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  Speaker 2: if I stuff up my job, as there are some
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  Speaker 2: kids who hear a swear word, that kind of thing,
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  Speaker 2: do you know what I mean? Worst case scenario if
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  Speaker 2: a builder does something a bit fun things are but
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  Speaker 2: out on a lean worst case scenario, if these guys
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  Speaker 2: stuff things up, people lose their jobs, their businesses, and
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  Speaker 2: their homes, so they don't get the latitude the rest
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  Speaker 2: of us too. They've got to nail this stuff. You
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  Speaker 2: want to know the best that the worst bit, rather
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  Speaker 2: about how badly they've stuffed it up, is that we
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  Speaker 2: will still be paying the price for where the OCR
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  Speaker 2: is sitting right now, which is too high, for probably
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  Speaker 2: another year, because that is how long it takes the
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  Speaker 2: OCR to wash through the system. So we've got inflation
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  Speaker 2: officially in the right place today sixteen October twenty twenty four,
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  Speaker 2: but we are still going to be punished by an
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  Speaker 2: overly high ocr for another year through to October twenty
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  Speaker 2: twenty five. So yeah, the inflation fight absolutely is over,
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  Speaker 2: but the punishment got a way to go yet.
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  Speaker 1: Haven't we. For more from News Talk st B, listen
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