Nick Tuffley: ASB Chief Economist ahead of the final Official Cash Rate announcement of 2025

Another cut to the Official Cash Rate is expected today but it could be the last for a long time. 

The Reserve Bank's reviewing the OCR at 2pm. 

Most economists expect the cash rate to be cut 25-basis-points to 2.5%. 

ASB Chief Economist Nick Tuffley told Ryan Bridge they expect the Reserve Bank to keep the door wide open to taking further action next year if needed.  

He says it will be wanting to use the three-month closedown period to really gauge whether it’s needed.  

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Episode Transcript

Speaker 1 (00:00):
It's a final ocr day for the year. Economists expecting
the reserve banks cut by twenty five basis points to
two point twenty five, leaving the door open for further
easing if the economy continues to stumble. Nick toughly asbchev
economists with us this morning. Nick, Good morning, Good morning.
Do you know what regional councils do?

Speaker 2 (00:16):
Nick, Well, I'm sure they sort of look after the
water and the environmental standards, but I don't know that
they do any oci decision.

Speaker 1 (00:26):
No, they don't, And which is what you're here to
talk about. We're expecting a quarter point cut, a quarter
percent cutless that the today later today. What are we
expecting beyond that?

Speaker 2 (00:38):
It's really going to be very much a focus on
what is the Reserve Bank judging is the likelihood that
it needs to cut further, and we expect it will
keep the door wide open to taking further action if
it needs to next year. So it's just got that
rock and a hard place at the moment where it
looks like the economy is starting to turn up, but
it's going to be away on holiday for three months

(01:00):
and it will be just wanting to use that period
to really gauge whether we are getting enough of a
recovery to come through to stop inflation calling too far
in the longer term?

Speaker 1 (01:10):
Do you agree Nick with kvy Bank. They said that
we should have gone lower sooner and we're now basically
having to do a mop up job.

Speaker 2 (01:19):
Look, there's a degree of that in the sense that
the Reserve Bank paused earlier on this year ended up
having to restart and even cut slightly more aggressively. But look,
it has been a challenging time because, let's face it,
inflation has been sticky, and the Reserve Bank was steering
inflation picking back up which it has to three percent,
and worrying that it may hold up there again with

(01:40):
those memories of seven percent inflation probably still steer it
into our brains a bit as well.

Speaker 1 (01:47):
If you've got a mortgage, our longer term fixed rates
already bottoming out.

Speaker 2 (01:52):
Do we think they are getting close to that? And
lot that's where I think the messages today are going
to be quite a call for that, because as long
as the Reserve Bank keeps the door open that it
could cut next year if it needs to, that's going
to help keep the the wholesale rates and the mortgage
rates two mortgage rates contained. You know, if they give
a signal say hey, look we think we've done the job.

(02:13):
You know, the's a rest that you do start to
see rates sort of pop pop back up a little bit.
So look, we're getting near the end of the declines
and mortgage rates, so sort of it's a time to
start sort of thinking about what the trade offs are
for people about you know, whether they do look to
fix longer or not, whether that's something that's in their interests.

Speaker 1 (02:32):
Appreciate your time, Nick Tuffley, asb chief Economists, were expecting
that decision from the Reserve Bank south Tonoon.

Speaker 2 (02:37):
For more from earlier edition with Ryan Bridge.

Speaker 1 (02:40):
Listen live to news Talks. It'd be from five am weekdays,
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