Jenee Tibshraeny: NZ Herald Wellington business editor on Reserve Bank Governor Dr Anna Breman offering a new economic outlook

Reserve Bank Governor Dr Anna Breman is pushing traders in financial markets to focus on the bank’s November 26 Monetary Policy Statement.

This has prompted investors to speculate that interest rates will remain low throughout 2026.

NZ Herald Wellington business editor Jenee Tibshraeny explained further.

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Episode Transcript

Speaker 1 (00:00):
Ryan Bridge.

Speaker 2 (00:01):
Right, let's get to Danae Tip Traeney, who's the Heralds
willing to business editor with us this evening, Jay, Good evening,
Good evening, Ryan. So we've had the Reserve Bank governor
busy doing a whole bunch of interviews this week. What
have you made of them and what impact they've had
on markets?

Speaker 1 (00:19):
Yeah, Look, interestingly, this week Arna Breeman came out and
did three interviews in which she delivered the same message.
She basically tried to talk markets down a weeb it
after the Reserve Bank cut the OCR in November. The
market really fixated on some of the commentary around the cut.

(00:40):
It got ahead of itself at priced in three OCR
hikes for next year. That's quite a lot. Wholesale interest
rates went up, you know that' saw Westpac, A and
Z the cop Bank all lift mortgage and term deposit rates.
This week. The governor just came out to basically, and
Reserve Bank speak, say calm down. So I spoke to

(01:02):
her yesterday afternoon. She didn't say calm down exactly, but
she directed the market to focus on the Reserve Bank's
OCR track and it's November statement. And according to that track,
the Reserve Bank reckons the ocr will stay low for
next year. In fact, there's a slight chance it could
even be cut a bit more. So she tried to

(01:23):
emphasize that and that did move the market. The market
has now priced in two o CR hikes for next year,
not three, and those wholesale interest rates have come down,
but they're still quite a bit above where they were
before the November statement.

Speaker 2 (01:38):
And hasn't that that change hasn't prompted the retails yet
to undo the you know, they like that they had
initially put in right no, and I.

Speaker 1 (01:49):
You know, I just I don't think they will. So,
you know, some banks haven't shifted yet, or or they
might not shift at all. I think the market is
you know, it's a lot of information toest this week.
It's probably still going to look to the GDP figures
out tomorrow, you know, markets factor and a bunch of
things when they set you know, when they sort of

(02:11):
do their trading in the money markets. You know. But
I think her comments did have an effect, and they
actually did take the market by surprise, because last week
we talked to the governor and we asked her, you know,
she comfortable with where the market is at and she
didn't really say anything this way or that way, But

(02:31):
at that point she hadn't actually met with her fellow
Monetary Policy Committee members. You know, it's the whole committee
that sets monetary policy. So after we meet her last week,
she did meet with the committee members and then came
out on Monday with, you know, with this sort of
jaw boning. So you know, some people have talked her
are quite critical of this. They said, why why didn't
she meet with her committee members as soon as she'd

(02:52):
got the job at the beginning of December, you know,
why did she wait so long? So I think that's
that's probably a fair question.

Speaker 2 (02:59):
Now, the new capital requirements for the banks, you know,
sort of undoing what adrien Or had done. Do you
think that we spoke to the co Op Bank earlier,
it didn't sound like it's going to really have much
of an impact. I know they don't come in immediately,
but much of an impact on our interest rates or
what we're paying the banks.

Speaker 1 (03:19):
Well, the Reserve Bank thinks that ultimately it will have
an effect. So remember these capital rules, which aimed at
making banks strong, they're being phased in. They'll be fully
phased in twenty twenty eight, the Reserve Banks saying that
with the changes it will make, it'll save banks about
reduce their funding costs by about twelve basis points compared

(03:42):
to that twenty twenty eight level. So in theory, you know,
banks should pass that cost saving onto customers. That's what
the Reserve Bank thinks, you know, they think it could
be in the magnitude of about ten basis points. The
savings that you might get on your you know, your
your loans and you know, if you're a savor that

(04:02):
the extra interest you'll get for your term deposit about
ten basis points. But that's compared to what it would
have been under the old rules by twenty twenty eight.
So that sounds awfully complex. I mean, it is a change,
Is it huge? No, Will banks pass that cost saving
on don't know? Will their shareholders just pocket that cost saving? Well,

(04:25):
you know probably. I talked to Nikola Willis about that
today and I said, well, this is going to be
really hard to measure. You know, so many things factor
into bank profits. How are we going to know exactly?
So I think that that's a key question. I mean,
the thing is here, though, when the rules first came in,
we didn't have this deposit compensation scheme. We now have that.

(04:48):
So that means that if your bank collapses, you'll get
some of your money back, which is an extra thing
that makes banks a bit stronger. So the Reserve Bank
is saying, look, because we have this new deposit compensation scheme,
we can eat up on these capital rules a bit.

Speaker 2 (05:03):
So yeah, makes sense. Hey, you know the deposit This
is a random question, but I've kind of been thinking
about it, and maybe it's a dumb question. I'm just
gonna ask. So it's one hundred thousand dollars per If
you've got an account with the bank, they guarantee you
up to one hundred thousand dollars. Would let's say you've
got five hundred thousand dollars. Should you not put one
hundred thousand dollars into different five different banks and then

(05:26):
be covered five times or is it put per person?

Speaker 1 (05:30):
Yeah?

Speaker 2 (05:30):
No, you're right.

Speaker 1 (05:31):
If you have five hundred thousand dollars, you're best off
under the scheme to split it. So if you have
five hundred thousand at one bank, that bank collapses, you'll
only get one hundred thousand back. But if you've spread
your five hundred thousand across five banks, and all five
banks collapse, you'll get you'll get one hundred thousand back
from each bank. So you know this is not not

(05:52):
financial advice, but if you want to maximize your best
then that's probably good idea. I had wandered actually whether
we'd see a whole lot of money moved when the
scheme came into place in the middle of the year
because of this, But it sounds like there sort of
hasn't been noticeable sums shifted.

Speaker 2 (06:11):
About maybe no one. That's because we haven't got the
word out yet. Now that now that you're giving us
this great financial advice, Janney.

Speaker 1 (06:18):
Yeah exactly, I'm going to get some some very angry phocals,
but no, I mean that is that is how it works. Okay,
finance companies and things are included in that as well.

Speaker 2 (06:27):
Fascinating. Now I just need to find half a million
dollars then I'll be yeah easy, Jane. Thank you to
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