March 3, 2025 • 6 mins
We ask an independent economist whether the recovery is underway and what’s going to happen to interest and exchange rates. Plus. what do Trump’s tariffs mean for NZ farmers?
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
He's an independent economist. I love catching up with them
here on the country, Cameron Bagriy, here's a starter for
ten for your Cameron. When's the economic recovery beginning or
has it?
Speaker 2 (00:12):
Well, the economic recovery is underway and started in the
fourth quarter of twenty twenty fourth, sort of blink, you
might have missed it. Yeah, but recovery is are sort
of there's two stages. Look. Stage one is getting what's
called economic growth. That's the kindy of forward propulsion, and
we've got that at the moment. Yeah. Stage two is
(00:35):
you need to get a totality or an aggregation of
that forward propulsion before you start to see the level
of activity back up acceptable levels. See basically need to
see six to nine months of happier time before people
out there generally start to see the rare economic benefits
that's coming around the middle of twenty twenty five.
Speaker 1 (00:54):
There are a lot of people out there at the
moment who aren't feeling the love.
Speaker 2 (00:59):
Well, it's been tough, yeah, twenty twenty four. If you
look at the official economic statistics GDP for CAPA that's
population adjusted GDP, you're the biggest tip we've seen since
the GFC, and we can debate whether it was the
biggest tip from the GFC. You know, the unemployment rate
at five point one percent, there's nowhere near the levels
we got during the GFC. You think non point lines
(01:21):
are nowhere near obviously got within the GFC. But it's
face for you. It's been pretty tough times. But maybe
people have just got used to the good times or
some of those that giddy times we saw in twenty
twenty one and twenty twenty two, and a lot of
I think what we're seeen in over twenty twenty four
was a little bit of coming back down to earth.
We've we've let the air out of the bag. Side
(01:42):
of speak in normality, beckons, Well.
Speaker 1 (01:44):
Interest rates fall as far as we hoped and expected.
Speaker 2 (01:50):
Well, they've already come down a reasonably long way. And
the Reserve Bank is out there saying, you know, they
think they'll be cutting the official cast right another two
to three twenty five basis point cuts taken the OCEIID
around three percent by the end of the year. What
does that mean in reality for borrows? We're now starting
to see those fixed mortgage rates touched down below five percent,
(02:10):
you know, a high four number. Do I think we're
going to see interest rates back with a three or
two in front of the answer is no. But your
interest rates have come down a long way from those
sort of six and a half percent levels that we
were seeing twelve months ago.
Speaker 1 (02:23):
So if you were coming off a fixed rate right
at the moment for your farm, or your house or
your business, would you be tempted to go in and
fix again? Now take some of those, for instance, in
housing sub five percent rates.
Speaker 2 (02:37):
Yeah, well so if I have we look at what
I'm targeting at the moment within my residential properties, all
my investments sort of stuff. You know, I try to
get an average rate of around five. Yes. If I
can get something sub five, yeah, whether it be a
one ear or two year, you know, I'm going to
be reasonably happy with that. Yeah. I don't think we
(02:58):
going back to those sort of days that we're going
to see mortgage interest rates with the two or a
three percent hand on the front of it. Yeah. The
new normal is perhaps, yeah, the old normal, Jamie, the
sort of stuff that we saw pre pre COVID as
opposed to post COVID. The problem is a whole lot
of people, I guess might have consisted. They're borroing expectations
of what we saw was some pretty remarkable boring experiences
(03:20):
in that twenty twenty and twenty one period.
Speaker 1 (03:23):
See Cameron, I've been around long enough I can remember
my golden rule back in the nineties was that if
it was under seven percent, I was locking it in.
So that's just about expectation, isn't it.
Speaker 2 (03:35):
Yeah. And one of the reasons that, yeah, the expectations
are lower now than what we saw through it are
twenty to thirty years there about, because what's called the
neutral official cash rate is lower, and the neutral official
cash rated where the reserve banks neither got the foot
on an accelerator or the break. You think of it
as that sort of holiday seaster period where aprin All,
the Reserve bank governor is up there taking the six
(03:56):
months of bad a call to pilot because he's not
doing too much. Yeah, that number went from about five
and a half percent down to two percent, so dragged
actual mortgage rates down with it. That number is now
on the rising in it looks like it's up around
sort of three percent. You have the neutral official cash rate,
that's when the reserve banks on holiday is around three percent,
then you sort of neutral boring rate, there's going to
(04:17):
be somewhere around five percent for a residential wants.
Speaker 1 (04:20):
Now, the Trump tariffs, the one month pause on tariffs
on Mexico and Canada is about to end. How do
you see this playing out?
Speaker 2 (04:31):
Well, we're at risk at the moment globally of a
full glowing trade war. Now where this goes we don't know.
But if you look at what the oe CID, what
the imare for everybody's basically saying tariffs or a trade
war is going to be bad for global growth and
it's going to be bad for inflation. What we're seeing
is that your tariffs or the three of tariffs have
(04:51):
now been increasingly used as a weapon to get what
countries want. And if you go back, there's a big
overarching theme here. And the big theme is that rules
based trading system that we're used to for thirty years,
where everybody played nice and abided by the rules, is
now being you see it by countries exercising power. And
this is not just America with karifs. This is China, Taiwan,
(05:13):
this is Ukraine versus Russia, this is Middle East, and
this is the new normal. You know the rules based system,
there's now a power based system, and a power based
system favors the big over with more.
Speaker 1 (05:25):
Is the world being run by Trump?
Speaker 2 (05:26):
She and putin Now, oh, well, interesting to see that. Yeah,
Europe stepped up in the past sort of forty eight
hours as well in regard to their commitment to Ukraine.
So we're starting to see a little bit of a
response from the other side, because yeah, the only way
to stand up to a bully, you stand up for them.
Speaker 1 (05:44):
Let's just stick with that US theme, Cameron Bagri and
depends on economists. I see that we're trading at about
fifty six US cents at the moment. Where do you
see that going.
Speaker 2 (05:55):
Yeah, or that currency popping down from the sixty one
to sixty three down into the the fifty to fifty
seven cents. Own is they provide a little bit of
crime on top for exporters. We're seeing in New Zealand
dollar returns for red meat and dairy. You've obviously popped
an awful lot high. I see starting to see a
lot more confidence come across the rural sector, and the
hope is that they'll open the cheap book in the
back half of two thousand and twenty five. My person
(06:18):
review is that I think the New Zealand dollar is
going to have another nudge at fifty five cents. And
one of the reasons I think we're going to have
another nudge at fifty five cents is that I think
the United States has got an inflation problem. And if
they've got an inflation problem, then I think the US
Fed A Reserve is not going to be cutting rates
and is the reason we can't. They're going to be
hiking rates in the exit of sixty five months. So
what's the space.
Speaker 1 (06:36):
Yeah, I think a lot of farmers out there listening
could probably live with an exchange rate of view as
fifty five cents. Cameron Bagrie, always enjoy your good common
sense here on the country. Thanks for your time, all
the best.
Speaker 2 (06:49):
I think
He's an independent economist. I love catching up with them
here on the country, Cameron Bagriy, here's a starter for
ten for your Cameron. When's the economic recovery beginning or
has it?
Speaker 2 (00:12):
Well, the economic recovery is underway and started in the
fourth quarter of twenty twenty fourth, sort of blink, you
might have missed it. Yeah, but recovery is are sort
of there's two stages. Look. Stage one is getting what's
called economic growth. That's the kindy of forward propulsion, and
we've got that at the moment. Yeah. Stage two is
(00:35):
you need to get a totality or an aggregation of
that forward propulsion before you start to see the level
of activity back up acceptable levels. See basically need to
see six to nine months of happier time before people
out there generally start to see the rare economic benefits
that's coming around the middle of twenty twenty five.
Speaker 1 (00:54):
There are a lot of people out there at the
moment who aren't feeling the love.
Speaker 2 (00:59):
Well, it's been tough, yeah, twenty twenty four. If you
look at the official economic statistics GDP for CAPA that's
population adjusted GDP, you're the biggest tip we've seen since
the GFC, and we can debate whether it was the
biggest tip from the GFC. You know, the unemployment rate
at five point one percent, there's nowhere near the levels
we got during the GFC. You think non point lines
(01:21):
are nowhere near obviously got within the GFC. But it's
face for you. It's been pretty tough times. But maybe
people have just got used to the good times or
some of those that giddy times we saw in twenty
twenty one and twenty twenty two, and a lot of
I think what we're seeen in over twenty twenty four
was a little bit of coming back down to earth.
We've we've let the air out of the bag. Side
(01:42):
of speak in normality, beckons, Well.
Speaker 1 (01:44):
Interest rates fall as far as we hoped and expected.
Speaker 2 (01:50):
Well, they've already come down a reasonably long way. And
the Reserve Bank is out there saying, you know, they
think they'll be cutting the official cast right another two
to three twenty five basis point cuts taken the OCEIID
around three percent by the end of the year. What
does that mean in reality for borrows? We're now starting
to see those fixed mortgage rates touched down below five percent,
(02:10):
you know, a high four number. Do I think we're
going to see interest rates back with a three or
two in front of the answer is no. But your
interest rates have come down a long way from those
sort of six and a half percent levels that we
were seeing twelve months ago.
Speaker 1 (02:23):
So if you were coming off a fixed rate right
at the moment for your farm, or your house or
your business, would you be tempted to go in and
fix again? Now take some of those, for instance, in
housing sub five percent rates.
Speaker 2 (02:37):
Yeah, well so if I have we look at what
I'm targeting at the moment within my residential properties, all
my investments sort of stuff. You know, I try to
get an average rate of around five. Yes. If I
can get something sub five, yeah, whether it be a
one ear or two year, you know, I'm going to
be reasonably happy with that. Yeah. I don't think we
(02:58):
going back to those sort of days that we're going
to see mortgage interest rates with the two or a
three percent hand on the front of it. Yeah. The
new normal is perhaps, yeah, the old normal, Jamie, the
sort of stuff that we saw pre pre COVID as
opposed to post COVID. The problem is a whole lot
of people, I guess might have consisted. They're borroing expectations
of what we saw was some pretty remarkable boring experiences
(03:20):
in that twenty twenty and twenty one period.
Speaker 1 (03:23):
See Cameron, I've been around long enough I can remember
my golden rule back in the nineties was that if
it was under seven percent, I was locking it in.
So that's just about expectation, isn't it.
Speaker 2 (03:35):
Yeah. And one of the reasons that, yeah, the expectations
are lower now than what we saw through it are
twenty to thirty years there about, because what's called the
neutral official cash rate is lower, and the neutral official
cash rated where the reserve banks neither got the foot
on an accelerator or the break. You think of it
as that sort of holiday seaster period where aprin All,
the Reserve bank governor is up there taking the six
(03:56):
months of bad a call to pilot because he's not
doing too much. Yeah, that number went from about five
and a half percent down to two percent, so dragged
actual mortgage rates down with it. That number is now
on the rising in it looks like it's up around
sort of three percent. You have the neutral official cash rate,
that's when the reserve banks on holiday is around three percent,
then you sort of neutral boring rate, there's going to
(04:17):
be somewhere around five percent for a residential wants.
Speaker 1 (04:20):
Now, the Trump tariffs, the one month pause on tariffs
on Mexico and Canada is about to end. How do
you see this playing out?
Speaker 2 (04:31):
Well, we're at risk at the moment globally of a
full glowing trade war. Now where this goes we don't know.
But if you look at what the oe CID, what
the imare for everybody's basically saying tariffs or a trade
war is going to be bad for global growth and
it's going to be bad for inflation. What we're seeing
is that your tariffs or the three of tariffs have
(04:51):
now been increasingly used as a weapon to get what
countries want. And if you go back, there's a big
overarching theme here. And the big theme is that rules
based trading system that we're used to for thirty years,
where everybody played nice and abided by the rules, is
now being you see it by countries exercising power. And
this is not just America with karifs. This is China, Taiwan,
(05:13):
this is Ukraine versus Russia, this is Middle East, and
this is the new normal. You know the rules based system,
there's now a power based system, and a power based
system favors the big over with more.
Speaker 1 (05:25):
Is the world being run by Trump?
Speaker 2 (05:26):
She and putin Now, oh, well, interesting to see that. Yeah,
Europe stepped up in the past sort of forty eight
hours as well in regard to their commitment to Ukraine.
So we're starting to see a little bit of a
response from the other side, because yeah, the only way
to stand up to a bully, you stand up for them.
Speaker 1 (05:44):
Let's just stick with that US theme, Cameron Bagri and
depends on economists. I see that we're trading at about
fifty six US cents at the moment. Where do you
see that going.
Speaker 2 (05:55):
Yeah, or that currency popping down from the sixty one
to sixty three down into the the fifty to fifty
seven cents. Own is they provide a little bit of
crime on top for exporters. We're seeing in New Zealand
dollar returns for red meat and dairy. You've obviously popped
an awful lot high. I see starting to see a
lot more confidence come across the rural sector, and the
hope is that they'll open the cheap book in the
back half of two thousand and twenty five. My person
(06:18):
review is that I think the New Zealand dollar is
going to have another nudge at fifty five cents. And
one of the reasons I think we're going to have
another nudge at fifty five cents is that I think
the United States has got an inflation problem. And if
they've got an inflation problem, then I think the US
Fed A Reserve is not going to be cutting rates
and is the reason we can't. They're going to be
hiking rates in the exit of sixty five months. So
what's the space.
Speaker 1 (06:36):
Yeah, I think a lot of farmers out there listening
could probably live with an exchange rate of view as
fifty five cents. Cameron Bagrie, always enjoy your good common
sense here on the country. Thanks for your time, all
the best.
Speaker 2 (06:49):
I think
Popular Podcasts
Bookmarked by Reese's Book Club
Welcome to Bookmarked by Reese’s Book Club — the podcast where great stories, bold women, and irresistible conversations collide! Hosted by award-winning journalist Danielle Robay, each week new episodes balance thoughtful literary insight with the fervor of buzzy book trends, pop culture and more. Bookmarked brings together celebrities, tastemakers, influencers and authors from Reese's Book Club and beyond to share stories that transcend the page. Pull up a chair. You’re not just listening — you’re part of the conversation.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.