Sharon Zollner: ANZ Chief Economist ahead of today's OCR announcement

Economists are agreeing on where they think today's Official Cash Rate will land. 

They expect a 25 basis point cut to the OCR, down from 3.75%. 

ANZ Chief Economist Sharon Zollner told Mike Hosking there's a risk the Reserve Bank opts for a different strategy after the US tariff announcement. 

She says if it were to be a surprise, a 50-point cut is more likely than a pause. 

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Episode Transcript

Speaker 1 (00:00):
And so before last week the Reserve Bank story seemed
fairly straightforward, didn't it. Twenty five points to day another
twenty five next meeting were largely done inflation in the box,
welcome to the new normal. Obviously, the world has since
been tipped on its head. So how does that play
out today? Aine's and chiep economist Sharon's on the back
were this, Sharon, good.

Speaker 2 (00:15):
Morning, good morning.

Speaker 1 (00:16):
Are we all aligned around twenty five today?

Speaker 2 (00:20):
Yes, that is certainly the case, But obviously the risk
that they do something else has rhythen given all the
kerfuffle in the last week. So if they were to surprise,
then a fifty point cup would be likelier then a pause.
But there is a general agreement that the senseful thing
to do at the moment is just sick to the
plan and keep a watching brief.

Speaker 1 (00:41):
How breaking news is the committee? I mean, how much
of what has happened in the last handful of days
will color what they're doing.

Speaker 2 (00:49):
Well, it certainly colors the risks, but it's too soon
for them to actually put it into their forecast. It's
very unclear how this is all going to pan out.
People are realizing that there's less bluff in these tariff
moves than was hoped or perhaps assumed early on, and
therefore that the global growth outlook is weaker. I mean,

(01:10):
the direct tariff impact from New Zealand is manageable ten
percent tariff on about thirteen percent of our goods exports.
So that's okay, that's not a game changer. But if
global growth starts to look weaker everywhere and it really
impacts the outlook for the Chinese consumer and everyone else,
then that's a bit different.

Speaker 1 (01:29):
Is three percent still neutral?

Speaker 2 (01:32):
That is a REZI Bank's estimate at the moment, So
that's sort of what we're all working to. But it's
one of those things that they sort of wait and
see how things pan out and then realize, oh, it
must have been that. It seems a reasonable working assumption.
But they always keep an open mind on that front.

Speaker 1 (01:46):
How important does the commentary is not a full monetary
So what he says, and the fact he's in part time,
he's only there for six months, it's all got a
flux vibe about it, doesn't it.

Speaker 2 (01:57):
Yeah, But I wouldn't say it's what he says, it's
what the committee says. They do pour over those documents
together very much. So, yes, it's all going to be
about hints about what comes next, about how open they
are to cutting more, cutting faster. I would expect some
reassuring words that they stand ready to do whatever is
required to in the face of weapon might come around

(02:18):
the corner. So the market has already moved to price
a small chance of assist you today, but also more
cuts going forward. And I wouldn't expect the Reserve Bank
to push back against that because that's a very reasonable
affection of the risks as they stand today. So I
don't think the Reserve Bank will sound is as sure
about what comes next as they did in Tebriy.

Speaker 1 (02:38):
But what about the psychology of in other words, the
key we say for people who are freaking out and
the mortgage people who are freaking out because they don't
know because no one knows, and that plays into the
vibe and the economy. Is that a problem.

Speaker 2 (02:50):
Yeah. Confidence is definitely a really important channel, and we
are still at a pretty fragile stage of the recovery.
I mean, the recovery is definitely happening. You can see
that a whole across a whole lot of data, but
we're definitely not in the coctual part of things, where
people are feeling that we're on a really good part.
I think terms are sort of just starting to dust
off those investment plans and employment plans, and this could

(03:13):
see them put them back on the shelf. And there
was a bank already assumed in their last statement that
the global uncertainty would damp an investment. They'll be even
more alert to that possibility now. But of course the
first point cut could be counterproductive in that regard. And
so far as this is the message that.

Speaker 1 (03:30):
Things are going to get really bad, jeez, it's interesting.
Good on you, Sharre and appreciate it very much. Sharon's
on them. I insert Cheap Economists. For more from the
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