National Government Fiscal Responsibility

Absolutely. You know, I got back in time for the OCR and and um budget day, of course. I thought I might get the full trifector and have a US Iran peace deal overnight. Didn't quite get that. But yeah, let's talk about the RBNZ and the OCR. So the OCR is on hold, that was expected, and it's a hawkish hold. But I could not agree with you more, Mike. My overwhelming impression, though, is that this was a far more interesting outcome than we normally get. Not so much the OCR decision, leaving the rate sort of unchanged at two and a quarter cent. But rather, yeah, this disclosure of the voting and the rationale behind the voting, it just gave us so much more insight, so much more flavor than we've had historically. Oh, that was fantastic. Uh look, holding, because holding the rate at two and a quarter, as it turns out, was a very, very close decision. So the monetary policy committee that makes that view was split completely evenly. Three all. Um, and then of course the boss, uh, Governor Bremen gets the casting vote, so it stayed on hold. But before we sort of unpack that that composition of the voting, um, just note that the published uh OCR track, you know, the forward track where they think it will be, did actually validate the market view that the OCR needed to rise. The market was already pricing that in. Uh the OBN said now have the OCR rising to sort of three percent really by the beginning of 2027. Uh, the forecast out past that does see a continued small lift in the OCR over the ensuing sort of twelve to twenty-four months. But but given the uncertainty involved, I'm not sure there's a great deal of benefit in sort of focusing on that longer term forecast. Now, this this split within the monetary policy committee, Mike, um, in favor of holding the OCR, the RBNZ staff, the internal people. Uh Bremen, Karen Silt, Paul Conway, lined up in the other corner. Let's put the OCR up camp with the external members. So fascinating split between the internal and the external. But Mike, if you read the statement, the split was really around timing. Uh the externals wanted to go now. Uh, the internal members were happy to sort of wait a bit, but acknowledging that the rate will have to go higher. It really comes down to a judgment call, Mike, about whether waiting increases the potential for those indirect second round effects uh of the increased energy prices taking hold. So things like inflation expectations, wage rising, the external saying we need to get on to it now, we need to stop those things from pricking up. The internals saying, look, we do have room to wait. Uh, and I think there's this some sort of I think there's some justification in saying that you would have expected that maybe to have been the other way around uh for the externals to be sort of closer out there to the business communities who which didn't really want, you know, which would like to see the rate not going up. So I thought that was absolutely fascinating. Um the MPS, when you actually read the whole statement, it does give us an insight into the bank's view on the economy. Key takeaway on this, Mike, is the extent to which the Middle East conflict has had a material impact on our economy. We were looking quite promising in Q1, uh, but that's all been hit. Confidence, growth expectations are all markedly lower. Um, and I look, I do think you also have to acknowledge Mike how much uncertainty there is around the outcome. We don't really know yet where the oil price will settle over the coming months. You know, how much buying demand will come from rebuilding strategic reserves in the world, how much damage has been done to major infrastructure in the Middle East. Um the market reaction mic was muted. Uh, going into the, you know, there's a lot of chatter, mainly from the business community that you know they didn't need the hike in the OCR. Uh, but as I've said, the market was already pricing it in. Uh, so not much short factor in the outcome. Mortgage rates will start to creep up. Uh, whether the OCR goes up in July or September, the market's saying uh there's about a 50-50 chance will go in July. Uh uh, so what do we get? We got short dated swaps, they were up sort of five to six points. It's once two years, longer dated five years plus they run change. Big move was the key with OK. We're much stronger, went from 5840 to 58 80, maybe a little higher. So fascinating.