Shane Solly: Harbour Asset Management spokesperson ahead of the Reserve Bank's upcoming Monetary Policy Statement

The Reserve Bank is set to deliver its next Monetary Policy Statement regarding the OCR on Wednesday.

It's expected the Bank will keep rates on hold for longer, but economists are divided on when the anticipated cuts will come.

Harbour Asset Management's Shane Solly says markets are pricing in cuts, which could come between November to next February. 

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Episode Transcript

Speaker 1 (00:00):
Joining me now is Shane Solely from Harbord Asset Management.
How are you, Shane? Hang on, I've got a fine chant.
I've got it all the way to the top. Here
here he is. That was my problem before, Shane.

Speaker 2 (00:10):
How are you? Yeah, well you're a Francisco and really
well yourself.

Speaker 1 (00:14):
Yeah, good, thank you. Apologies. I was in it was
in a text queue there and I missed you at
the top. Now tell me. The Reserve Bank's next monetary
policy statement is due on Wednesday and it's widely expected
to keep the cash rate on hold. Is that right?

Speaker 2 (00:29):
That's right, that's right, that's right. And today we've had
this injured a shadow board which is made up of
nine private sector economists, business people, academic so they've come
out and said, you know what, this grows sling is
a bit of slacking. The labor market place is falling back,
but not enough in their opinion for the Reserve Bank
and you yelling to start cutting rates. But interesting, there's
a couple of bit of contention in the group. There

(00:51):
is several members thinking that early next year it needs
to happen. In one board memberk she said, I should
be cutting now. So we're getting closer, and I think
interest rate market, so starting to think about it, you know,
the members when most people in the market, I think
about cuts, and if we look forward to July next year,
about one percy that cuts baked. So it's a little
bit of tough times for borrowers to come. But getting

(01:12):
near a turning point.

Speaker 1 (01:13):
Perhaps we have been well forewarned about that though, haven't
we shame? I mean a lot of people are thinking
it's going to be sort of early twenty twenty five.

Speaker 2 (01:19):
Even, Yeah, and that's right. And so what we're seeing
globally is central banks getting to the end. They can
see that the medicine of higher interest rates is working,
but they just want to see it really get on
top of inflation. And so I think if you're a
central banker, you're going to wait. You're going to wait
for things to get particularly the heat coming out of inflation.
So but the economy is really coming down hard, we

(01:42):
will notice, we can see it. And that's going to
what's lead is going to lead this cutting cycle.

Speaker 1 (01:48):
Do you think the bank might indicate a bit more
regarding the timing of any potential cut.

Speaker 2 (01:53):
Yeah, great question for Jess, because I think this is
a thinking about thinking about where we might be thinking
about thinking about cutting rates. That is something that is
probably not necessarily baked in to capital markets, not into
infestrate full guys. And that's what we'll all be looking
for as a vest Is in the next few days.
Is on Wednesdays, there's some Hey, we're thinking about it.

(02:14):
We're starting to see that tighter interest rates, the restraint
on availability didn't really start to hammer home.

Speaker 1 (02:22):
Contact Energy's share price took ahead today.

Speaker 2 (02:24):
What happened, Jane, Yeah, Look, Contact has been a great
story from New Zealand and vests. They've done a good
job of growing their generation capability of the literacy generation.
But they're coming out today and cut their earnings for
GUS and it really comes down to a little bit
of technical stuff around this new portfolio of particularly geofilmal generation,

(02:45):
just some slow down in terms of when the new
generation geo thermal plant comes on. At the same time,
they don't have access to the gas that used to
be used to fill this generating requirements, so they've said
we've got to go buy electricity in the open market.
It's going to cost us more because we don't have

(03:05):
the GFM or plants we've got some outages coming through
and we just can't get excess to the guests, so
they've trimmed. Thereforecas On earning to put of a surprise.
Haven't seen next a little while from context, So yeah,
share price ended up down four percent today at eight
dollars seventy eight, so a bit of a surprise.

Speaker 1 (03:21):
Thank you so much, Shane, good to catch up with you.
That was Shane Soley. They're from Harbord Asset Management. For
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