Caitlyn Paker Molfedesset Management with me. Now, hey, Caitlin, Hi, here are you. I'm very well, thank you. Now, there was a little bit of flirtation from the market, wasn't there as to the possibility of a seventy five basis point cut? So when we got the fifty were they disappointed today?

Caitlyn Paker Molfedesset Management with me. Now, hey, Caitlin, Hi, here are you. I'm very well, thank you. Now, there was a little bit of flirtation from the market, wasn't there as to the possibility of a seventy five basis point cut? So when we got the fifty were they disappointed today?

Yeah, Look, it was very much consensus that we have half percent, but they were toying with the idea that we might get a bit of a chunkier point seven five percent cut away before Christmas. But look, there wasn't really much disappointment. I suppose what we did see was a bit of volatility versus drastic end to day changes. And there's a bit of time between when the Reserve Bank released their statement to their forecast before we have the PRESO, so the communication was a bit mixed initially. And initially we actually saw a currency rally in the view that the official cash right wasn't going to be moving as low as initially taught looking at the forecast. But then on the press conference with Governor Or he gave very clear guidance that another half a percent cut is very much their base case for February so we saw a lot of this unwined as well. And then in terms of interest rates, there was no massive move in terms of official cash right track. They still see the low at about three percent, but they did note that there is a higher risk of inflation volatility towards the end of next year. So we saw interest rates move up. You know, the two year was up aboutero point one percent at the end of the day, but nothing drastic to call out, and nothing major to call out either on the equity side. After today, it was very much as expected.

Yeah, Look, it was very much consensus that we have half percent, but they were toying with the idea that we might get a bit of a chunkier point seven five percent cut away before Christmas. But look, there wasn't really much disappointment. I suppose what we did see was a bit of volatility versus drastic end to day changes. And there's a bit of time between when the Reserve Bank released their statement to their forecast before we have the PRESO, so the communication was a bit mixed initially. And initially we actually saw a currency rally in the view that the official cash right wasn't going to be moving as low as initially taught looking at the forecast. But then on the press conference with Governor Or he gave very clear guidance that another half a percent cut is very much their base case for February so we saw a lot of this unwined as well. And then in terms of interest rates, there was no massive move in terms of official cash right track. They still see the low at about three percent, but they did note that there is a higher risk of inflation volatility towards the end of next year. So we saw interest rates move up. You know, the two year was up aboutero point one percent at the end of the day, but nothing drastic to call out, and nothing major to call out either on the equity side. After today, it was very much as expected.

And let's seventy five basis point that that idea that was basically there because the reserve banks having this mess of three month break right.

And let's seventy five basis point that that idea that was basically there because the reserve banks having this mess of three month break right.

Yeah, they're definitely they're heading on their three month hiatus as they do every year. So some of the thinking behind it was, you know, why not get ahead of it. A lot can happen in three months, and we are seeing a bit of green shoots in the data out there, but it's still very very soggy, and a lot can happen in three months. Also offshore, we have an inauguration in the US, but you know, regardless if they did the point seventy five today instead of the half a percent, we still have an official cash right that starts with the four, so that's still considered to be very strict of and the Reserve Bank they're not expecting to get back to their the bounds of what they consider neutral, so not you know, stimulating growth, but not neither restricting growth. They're causing inflation until the end of twenty twenty five.

Yeah, they're definitely they're heading on their three month hiatus as they do every year. So some of the thinking behind it was, you know, why not get ahead of it. A lot can happen in three months, and we are seeing a bit of green shoots in the data out there, but it's still very very soggy, and a lot can happen in three months. Also offshore, we have an inauguration in the US, but you know, regardless if they did the point seventy five today instead of the half a percent, we still have an official cash right that starts with the four, so that's still considered to be very strict of and the Reserve Bank they're not expecting to get back to their the bounds of what they consider neutral, so not you know, stimulating growth, but not neither restricting growth. They're causing inflation until the end of twenty twenty five.

And okay, so we've gone from five and a half to four point twenty five. The average mortgage rate that kiwis are paying is still close to six and a half why Yeah, so that.

And okay, so we've gone from five and a half to four point twenty five. The average mortgage rate that kiwis are paying is still close to six and a half why Yeah, so that.

Was highlighted today by Governor or So the effective interest rate that's six and a half percent that kiwis are paying right now, that's expected to drop to about five point eight percent by their calculations over the next year, which is still pretty high. And you know why is this? It really comes down to the margin pressures that banks are having on their funding costs. So they were benefiting from that lower funding from the Funding for Lending program, you know, cheap funding that the worbiens out we're able to provide. That's now off the table, so the banks are having to pay up for more expensive deposits, so they're not rushing to cut their margins and Governor Or he did note that he does expect on the flip side that as we see some activity in the housing market pickup, we should start to see some competitive pressures come through. Because today there hasn't been much going on in terms of lending for housing, so there hasn't been anything to be too competitive about. So he is hopeful, I suppose an optimistic that those margins will start to come down a bit and relief will be felt for mortgage owners.

Was highlighted today by Governor or So the effective interest rate that's six and a half percent that kiwis are paying right now, that's expected to drop to about five point eight percent by their calculations over the next year, which is still pretty high. And you know why is this? It really comes down to the margin pressures that banks are having on their funding costs. So they were benefiting from that lower funding from the Funding for Lending program, you know, cheap funding that the worbiens out we're able to provide. That's now off the table, so the banks are having to pay up for more expensive deposits, so they're not rushing to cut their margins and Governor Or he did note that he does expect on the flip side that as we see some activity in the housing market pickup, we should start to see some competitive pressures come through. Because today there hasn't been much going on in terms of lending for housing, so there hasn't been anything to be too competitive about. So he is hopeful, I suppose an optimistic that those margins will start to come down a bit and relief will be felt for mortgage owners.

Kaitlyn, thanks for running us through that. Appreciate It's Kaitlyn Park and milfed ESTC Management. For more from hither Duplessy Allen Drive. Listen live to news talks. It'd be from four pm weekdays, or follow the podcast on iHeartRadio

Kaitlyn, thanks for running us through that. Appreciate It's Kaitlyn Park and milfed ESTC Management. For more from hither Duplessy Allen Drive. Listen live to news talks. It'd be from four pm weekdays, or follow the podcast on iHeartRadio