Westpac Chief Economist Kelly Eckhold joined Andrew Dickens to discuss the economic news in New Zealand and around the world.
They discussed European interest rates, the global dairy trade, and the US job market and dollar.
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Speaker 1 (00:09):
You're listening to a podcast from News Talks'd be follow
this and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:17):
It's the Wait Time You Day Breakfast. I'm Andrew Dickens.
At six point fifteen. Let's talk money. Westpactief economist is
Kelly Echo. Good morning to her.
Speaker 3 (00:24):
Kelly, Good morning.
Speaker 2 (00:26):
So we've got the European Central Bank and the Bank
of England meeting over night to discuss the interest rates.
Speaker 3 (00:31):
Yeah, yeah, they did, and they delivered as expected. The ECB,
for example, left their rates unchanged. The governor there, Christine Leguard,
actually sounded pretty chilled and happy about the outlook. Interest
rates there at two percent, looking like they're probably going
to stay there for a while unless the euro really
(00:52):
does race up. They're commenting that easier German fiscal policy basically,
the money they spended to try to keep the Russians
out of the door is really helping to support growth
here and probably issue one of the interesting things I
know noticed as they're extending what they call this repo
line framework where they basically commit to the end other
(01:14):
central bank's money and euros in times of trouble, and
then this could be quite interesting could be quite interesting
for the Reserve Bank actually, because you know, we're in
a world now where the Federal Reserve is perhaps less
likely to be dishing out money in a crisis because
they're more interested in themselves. So you know, perhaps there's
(01:34):
going to be a role there for the European Central
Bank to pick up the slack there if there's trouble.
I will also say the Bank of England, they'd also
didn't change rates. They're a bit more dubbish than expected,
and it's looking like there's going to be a rape
cut there. In the next couple of whiles, it was
a nine edge voat in that Bank of England governor.
He basically sounded like he could easily be talked into
(01:55):
a rep cut.
Speaker 2 (01:55):
Yeah, I understand England the very close decision five to
four to hold, so that's pretty close. They're at three
point seventy five percent, which is high when you compared
to Europe, which is at two. But you're right, the
Bank is saying there could be great cuts for England
in twenty twenty six, and that would be very gratefully received.
Speaker 3 (02:15):
Indeed, Yeah, I mean that they've had a bit of
a trouble because inflation has just been a bit sticky
and their economy hasn't been too good. So that's a
bit of a side of optimism in PC.
Speaker 2 (02:26):
I mean, while, by the way, can I just say
about the European Central Bank? Their rates have now held
steady for a fifth consecutive meeting, So Europe is very
stable right now and easy at two percent. Now to America,
we've got jobs. What's happening with the jobs and the
indicators there?
Speaker 3 (02:41):
Well, I think the jobs thing has really what's driven
markets over night. We've got lower long term magistrates and
weaker equities, and it's been a few indicators suggesting that
jobs are a bit harder to come by here. Jobless
claims went up unexpectedly to two hundred and thirty one
thousand for the last week. There were fewer new jobs
coming out of the Jolt survey, and these layoffs from
(03:04):
large brooms, the Challenger Layoffs survey survey had a big
like to the weakest that it's seen since two thousand
and nine. So that's just made people think, oh, actually,
maybe the serious jobs market is going to weaken after all.
Speaker 2 (03:19):
Okay, let's get back home, because this is a big one.
We had a global dairy trade auction and it was
pretty good, and it's been not so good lately, and
now people are started to talk about ten dollars at
the farm gate again. So what is happening with dairy
right now?
Speaker 3 (03:33):
Well, that's a bloody good question. Before Christmas, we were
all thinking there were tons of supply and there wasn't
going to be enough by it. So these prices were
falling and everybody was furiously cutting their payout forecast. We
cut outs to nine forty from ten bucks. A few
of the others on the street got a bit more excited,
and I think at least one bankhaded under nine bucks.
But what we've seen this year is a really big
(03:56):
rise in dairy prices, basically up over twenty percent now
since the start of the year. Big auction last week,
big rises in the futures after the auction this week
as well. There was a ten percent rise in skim
milk prices in the last ouction, five percent on everything else.
Actually just looks like there's some pretty resilient demands, so
(04:17):
there's buyers out there for all this milk. So I'm
thinking that we'll all probably have to put our payout
four casts upper. This is going to continue because we'll
get closer to ten bucks again.
Speaker 2 (04:28):
I was going to say, are you going to go
ten bucks and above?
Speaker 3 (04:32):
Well, the exchange rate's a bit higher, so you sort
of have to kind of like offset that off of birds.
But I actually think the really interesting question is not
so much this season, but if this is going to
continue on past the middle of the year, then it'll
be the season after that where the forecast is down
at nine bucks, but perhaps it's going to be closer
to teen.
Speaker 2 (04:52):
You talk about our exchange rate, and I've got a
little bit of time, so I'd just like to talk
to you briefly about that. The greenback is falling and
it's not been used as the currency, and therefore people
are doing trades. I know that Canada and China they're
doing trades based on their currency rather than using the
US dollar. Is our dollar going up because we're getting
(05:14):
better or is our dollar going up because the US
dollar is going down?
Speaker 3 (05:19):
You know, there's a bit of both here. The US
dollar has generally been weaker in the last couple of weeks,
particularly as things like that US equity market has looked
a little bit wobblier, there's also been some kind of
weakness and a whole lot of risk currencies like you
bet coin is under seventy thousand now. But underneath this,
you know, you have to remember that all the economic
(05:40):
data and New Zealand has looked quite a bit better
in the last few weeks and the market has got
to rate best part of two rate hikes priced him
for twenty twenty six. So that is a bit of
a turnaround and sentiment which has really helped a KIV
as well.
Speaker 2 (05:55):
Good stuff, and I thank you so much as Kelly
Echold who's from Westbak he is the chief economist there.
The phenomenon's known as the de dollarification. Very hard thing
to say at the start of the morning. As the
trade wars and the tariff wars continue and America continues
to be more isolationists, people are starting to move away
from the dollar, the US dollar being the global currency
(06:17):
that trades are done on, and that's making for some
very interesting ramifications. We'll keep an eye on that for you.
It is our six twenty one. In a few moments time,
we're right around the country with all the news that
is making news with Lockholm really including of course Mount
Monganui where we have developments around the campground there. This
is the White Tonguey Day Breakfast. It's News Talks hereb
It's six twenty one.
Speaker 1 (06:36):
For more from News TALKSREB listen live on air or online,
and keep our shows with you wherever you go with
our podcasts on iHeartRadio
You're listening to a podcast from News Talks'd be follow
this and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:17):
It's the Wait Time You Day Breakfast. I'm Andrew Dickens.
At six point fifteen. Let's talk money. Westpactief economist is
Kelly Echo. Good morning to her.
Speaker 3 (00:24):
Kelly, Good morning.
Speaker 2 (00:26):
So we've got the European Central Bank and the Bank
of England meeting over night to discuss the interest rates.
Speaker 3 (00:31):
Yeah, yeah, they did, and they delivered as expected. The ECB,
for example, left their rates unchanged. The governor there, Christine Leguard,
actually sounded pretty chilled and happy about the outlook. Interest
rates there at two percent, looking like they're probably going
to stay there for a while unless the euro really
(00:52):
does race up. They're commenting that easier German fiscal policy basically,
the money they spended to try to keep the Russians
out of the door is really helping to support growth
here and probably issue one of the interesting things I
know noticed as they're extending what they call this repo
line framework where they basically commit to the end other
(01:14):
central bank's money and euros in times of trouble, and
then this could be quite interesting could be quite interesting
for the Reserve Bank actually, because you know, we're in
a world now where the Federal Reserve is perhaps less
likely to be dishing out money in a crisis because
they're more interested in themselves. So you know, perhaps there's
(01:34):
going to be a role there for the European Central
Bank to pick up the slack there if there's trouble.
I will also say the Bank of England, they'd also
didn't change rates. They're a bit more dubbish than expected,
and it's looking like there's going to be a rape
cut there. In the next couple of whiles, it was
a nine edge voat in that Bank of England governor.
He basically sounded like he could easily be talked into
(01:55):
a rep cut.
Speaker 2 (01:55):
Yeah, I understand England the very close decision five to
four to hold, so that's pretty close. They're at three
point seventy five percent, which is high when you compared
to Europe, which is at two. But you're right, the
Bank is saying there could be great cuts for England
in twenty twenty six, and that would be very gratefully received.
Speaker 3 (02:15):
Indeed, Yeah, I mean that they've had a bit of
a trouble because inflation has just been a bit sticky
and their economy hasn't been too good. So that's a
bit of a side of optimism in PC.
Speaker 2 (02:26):
I mean, while, by the way, can I just say
about the European Central Bank? Their rates have now held
steady for a fifth consecutive meeting, So Europe is very
stable right now and easy at two percent. Now to America,
we've got jobs. What's happening with the jobs and the
indicators there?
Speaker 3 (02:41):
Well, I think the jobs thing has really what's driven
markets over night. We've got lower long term magistrates and
weaker equities, and it's been a few indicators suggesting that
jobs are a bit harder to come by here. Jobless
claims went up unexpectedly to two hundred and thirty one
thousand for the last week. There were fewer new jobs
coming out of the Jolt survey, and these layoffs from
(03:04):
large brooms, the Challenger Layoffs survey survey had a big
like to the weakest that it's seen since two thousand
and nine. So that's just made people think, oh, actually,
maybe the serious jobs market is going to weaken after all.
Speaker 2 (03:19):
Okay, let's get back home, because this is a big one.
We had a global dairy trade auction and it was
pretty good, and it's been not so good lately, and
now people are started to talk about ten dollars at
the farm gate again. So what is happening with dairy
right now?
Speaker 3 (03:33):
Well, that's a bloody good question. Before Christmas, we were
all thinking there were tons of supply and there wasn't
going to be enough by it. So these prices were
falling and everybody was furiously cutting their payout forecast. We
cut outs to nine forty from ten bucks. A few
of the others on the street got a bit more excited,
and I think at least one bankhaded under nine bucks.
But what we've seen this year is a really big
(03:56):
rise in dairy prices, basically up over twenty percent now
since the start of the year. Big auction last week,
big rises in the futures after the auction this week
as well. There was a ten percent rise in skim
milk prices in the last ouction, five percent on everything else.
Actually just looks like there's some pretty resilient demands, so
(04:17):
there's buyers out there for all this milk. So I'm
thinking that we'll all probably have to put our payout
four casts upper. This is going to continue because we'll
get closer to ten bucks again.
Speaker 2 (04:28):
I was going to say, are you going to go
ten bucks and above?
Speaker 3 (04:32):
Well, the exchange rate's a bit higher, so you sort
of have to kind of like offset that off of birds.
But I actually think the really interesting question is not
so much this season, but if this is going to
continue on past the middle of the year, then it'll
be the season after that where the forecast is down
at nine bucks, but perhaps it's going to be closer
to teen.
Speaker 2 (04:52):
You talk about our exchange rate, and I've got a
little bit of time, so I'd just like to talk
to you briefly about that. The greenback is falling and
it's not been used as the currency, and therefore people
are doing trades. I know that Canada and China they're
doing trades based on their currency rather than using the
US dollar. Is our dollar going up because we're getting
(05:14):
better or is our dollar going up because the US
dollar is going down?
Speaker 3 (05:19):
You know, there's a bit of both here. The US
dollar has generally been weaker in the last couple of weeks,
particularly as things like that US equity market has looked
a little bit wobblier, there's also been some kind of
weakness and a whole lot of risk currencies like you
bet coin is under seventy thousand now. But underneath this,
you know, you have to remember that all the economic
(05:40):
data and New Zealand has looked quite a bit better
in the last few weeks and the market has got
to rate best part of two rate hikes priced him
for twenty twenty six. So that is a bit of
a turnaround and sentiment which has really helped a KIV
as well.
Speaker 2 (05:55):
Good stuff, and I thank you so much as Kelly
Echold who's from Westbak he is the chief economist there.
The phenomenon's known as the de dollarification. Very hard thing
to say at the start of the morning. As the
trade wars and the tariff wars continue and America continues
to be more isolationists, people are starting to move away
from the dollar, the US dollar being the global currency
(06:17):
that trades are done on, and that's making for some
very interesting ramifications. We'll keep an eye on that for you.
It is our six twenty one. In a few moments time,
we're right around the country with all the news that
is making news with Lockholm really including of course Mount
Monganui where we have developments around the campground there. This
is the White Tonguey Day Breakfast. It's News Talks hereb
It's six twenty one.
Speaker 1 (06:36):
For more from News TALKSREB listen live on air or online,
and keep our shows with you wherever you go with
our podcasts on iHeartRadio
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