Remy Morgan: Milford Asset Management expert on the Reserve Bank slashing the OCR by 25 basis points

The Reserve Bank is keeping a watching brief internationally as Donald Trump's new tariffs kick in.

The central bank cut the Official Cash Rate another 25 basis points, to 3.5 percent.

Banks speedily lowered their advertised rates in response.

Milford Asset Management's Remy Morgan explained what the bank will be monitoring going forward.

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Episode Transcript

Speaker 1 (00:00):
The ENZX finished down zero point seven for the day,
the A six two hundred currently down one point eight,
and the Reserve Bank today cut the official cash rate
twenty five basis points. We're now down to three and
a half. Remy Morgan's milfit Asset Management with us tonight, Remy,
good evening.

Speaker 2 (00:15):
Hi, Ryan.

Speaker 1 (00:16):
Very much in line with expectations, this cut, isn't it.

Speaker 2 (00:19):
Yeah, So today's OCR decision, as you say, was very
much expected by the market. With twenty five basis points
fully priced in in the minutes today, there was nothing
to suggest that they considered a smaller or larger cut
at this point in time. But what we have seen
over the last few days leading into today's decision was
a shift to the market pricing three further cuts from

(00:41):
here rather than two previously. And that's largely been in
response to the tariff announcement last week and market concerns
on global growth.

Speaker 1 (00:49):
Yeah, and those cuts taking the market prediction to lower
than it was at three point one, down to two
point seventy five. I think what about the Reserve Bank?
Did they consider the teariff policies? Did they mention that
in their note?

Speaker 2 (01:03):
Yeah, So there's still quite a lot of uncertainty over
what might actually happen, and this is why the RBNZI
didn't really deviate from expectation today. But what most of
the committee did consider is that these trade policies do
have the potential to move New Zealand inflation lower over
the medium term. So what they mentioned in the minutes
is that as the picture becomes more clear, they do

(01:25):
have the scope to respond as necessary.

Speaker 1 (01:28):
How could the trade terrorists do you think impact the
future decisions?

Speaker 2 (01:33):
Yeah, so if there is a risk of low inflation,
the RBNZI couldn't look to further reduce the ocr so
that could mean a faster pace of cuts or potentially
a lower CACHE rate at the end of the year.
But again this is really going to depend on several
factors and how they play out over the coming weeks.

Speaker 1 (01:51):
What will the watch rbnz'd be watching closely.

Speaker 2 (01:56):
Yeah, so, first and foremost, any negotiations, revisions, responses to
trade policies in the coming weeks, and then from there
the rb and ZEBRA need to look at the impact
on our key trading partners, our currency, and then the
flow through to our domestic economy and inflation.

Speaker 1 (02:12):
Remy, thank you, for that up that great to have
you on, as always, Remy Morgan Milfinaesset Management. For more
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