Nick Tuffley: ASB Chief Economist ahead of today's OCR figures

There are expectations the Reserve Bank will leave the OCR untouched once again. 

The Official Cash Rate's been held at 5.5% the last six times in a row. 

Many bank economists believe it'll be held again while the Reserve Bank waits for more evidence inflation's falling back towards its target band of one to three percent. 

ASB Chief Economist Nick Tuffley told Andrew Dickens they think there are some encouraging signs that inflation will fall and be back within the target band fairly soon. 

He said that people just need to hang in a little longer. 

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Episode Transcript

Speaker 1 (00:00):
July the tenth. The OCR is announced today. Most economists
agree it's likely to hold. It's sitting at five point
five percent. They do remain divided though about when they'll
see a drop, and that's what we want. Chief economist
at the ASB Bank is Nick Toughly. You're joins me now,
Helen Nick Good mining that OCR rate now has been
stuck there for a year. The fight against inflation has
been going on for two and a half years. This

(00:22):
is becoming a prolonged period of hardship. How long can
it last? How long do you think businesses can bear
the headwinds?

Speaker 2 (00:30):
Love, I think people just need to hang in a
little bit longer. We do think there are some encouraging
signs that inflation will fall and be back within the
target band, you know, fairly soon and give the Reserve
Bank the comfort that the job is done.

Speaker 1 (00:47):
Markets have been saying that they are expecting an easy
that there are green shoots, but at the same time
also saying they don't expect any change to that rate.

Speaker 2 (00:57):
Well, that's that's right. At this meeting, we don't think
the Reserve going to be changing the OCR at all.
We expect the Reserve Bank is still going to be
fairly cautious as it's looking ahead, and what we're looking
for today is some signs that it's just starting to
see that inflation will come down a little bit quicker
than what it's expecting. The challenge for Reserve Bank though,

(01:17):
is that the official inflation figures for the Dune quarter
are it to be up till next week, which is
not very helpful when you're making your decision right now.

Speaker 1 (01:25):
The other problem we have actually is the crystal ball
gazing and that we're not getting any analysis from the
Reserve Bank here. We're just getting a rate announcement.

Speaker 2 (01:31):
Right, Well, this is correct. This is one of the
short announcements. The Reserve Bank does what we call a
monetary policy statement four times a year and that's quite
Fulsome has lots of detailed forecasts and this is just
a review. It's in between a couple of the monetary
policy statements, so we don't have a lot to go on.
It'll be a few paragraphs and then the details of

(01:52):
what they discussed at the meeting.

Speaker 1 (01:53):
All right, So I'm just a tempering people's expectations. Should
we be surprised at how high inflation has main for
so long.

Speaker 2 (02:03):
We've had, such when you look back at it with retrospects,
such an unusual period. It was the perfect storm for
inflation pressures. Just about any source you could have got
inflation from, you got it at the same time. And look,
it has been persistent. There's probably been this surprise, not
just here but around the world as well, so we're
not alone, although our inflation pressures have probably been a

(02:25):
touch more persistent than other countries.

Speaker 1 (02:27):
Nick toughly, I thank you for your time today, and
Nick is the asb's chief economists. For more from the
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