Liam Dann: NZ Herald business editor at large ahead of the Reserve Bank's final meeting of the year

The Reserve Bank is set to meet for the last time this year to review the Official Cash Rate.

Economists predict a cut will come - but it's unclear if the Bank will cut as high as 75 percent.

NZ Herald business editor at large Liam Dann unpacks the odds.

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Episode Transcript

Speaker 1 (00:00):
Now the Reserve Bank, speaking of which it's going to
meet for the last time this seear next week to
review the official cash rate, and most economists are now
picking a cut of fifty basis points. Liam dan As
The Herald's Business editor at large ALM get a Heather
seventy five basis points off the cards.

Speaker 2 (00:14):
Now, A, it does seem to be. Yeah, like I
think we mentioned last week, you know, I could see
some logic for getting down to where we're going fast,
but I think that the consensus is that the economy,
just some of some of the economic data that's coming
in the past three or four weeks, at unemployment not
being quite as bad as expected, things suggest that fifty,

(00:36):
you know, is sort of a big cat. Really, seventy
five is slightly panic cut, and so you know, you
wouldn't want to send a message that we're panicking or
that there was a crisis. So that's the odds. But
it is the big monetary policy statement, this one. So
this is the one where we get all the documents
in the forecast. So there'll be actually a lot of
interest in you know, because okay, we know that we're

(00:57):
going to cut down to four point twenty five next
Where are we going next year? How low is this
going to end up? Those are the things that we're
going to be looking for, I guess. So you know,
as much as you've had some views on this in
the past, as much as we can trust trust the
Reserve banks forecast for where they're going, I guess is
the issue.

Speaker 1 (01:17):
The thing is, though, Liam, I mean, the employment numbers
seem to be holding up quite well, but then you
listen to Treasury and they are revising what's going to
happen with the government's fiscal situation, and it's like way
worse than they thought, so they've got to take that
into account as well.

Speaker 2 (01:31):
Yeah, that looked pretty rough, and I mean activity isn't
expected to pick up that fast. That's the trouble. It's
you know, this survived to twenty five thing. Well, A
and Z had some quarterly forecasts out earlier in the week,
and you know they're talking about the recovery rarely is
this from the second half of twenty twenty five, And
it might be all up only about one point one

(01:52):
percent growth next year, which is pretty anemic. I mean,
you know, sure it's good to have growth. We've had
had basically a year of recess. But you know, if
you're expecting an economic boom coming, you're going to be disappointed.
So it doesn't you know, there therefore casts that there
are some good things happening. There's some some strong dairy
prices and all that sort of stuff, but that takes

(02:13):
a while to get through the economy, so you know,
it's not doesn't all suddenly come right after the summer,
and that of course, as Treasury will be, they're sort
of prepping us, i think, for the HAIFU for the
half year accounts with a speech basically letting us know
that it's not booming, and that doesn't it means the
text takes not going to be fantastic and so yeah,

(02:33):
you've got a factor all that in. But yeah, I
think we're going to see them cut fifty and maybe
suggest fifty again in February and then down to maybe
three point five three point twenty five as a sort
of baseline.

Speaker 1 (02:46):
How good, Liam, Thank you appreciate it, Liam Dan, the
Herald's Business editor at lunch. For more from Heather Duplessy
Allen Drive, listen live to news talks.

Speaker 2 (02:54):
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