Mike's Minute: The pressure is on Christian Hawkesby

The Mike Hosking Breakfast

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2d ago 1:54

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The pressure is on the new Reserve Bank fill-in Governor tomorrow.

Although given it’s a committee, in theory he is more of a messenger.

It's reported that we have increased calls for a 50 basis point cut.

Why? Because things aren't flash.

If you read business results in the current reporting season, a lot of commentary tells us the recovery is underway. Things are looking better.

We can certainly see that, for example, with retail spending. The numbers produced just last Friday for the opening quarter of the year are up, and in some parts of the sector they're up quite a bit.

We have seen manufacturing expanding for several months in a row now.

So those are the fact-based statistics. The other measures, like confidence, have dropped. We see people in the doldrums.

But that is a vibe.

Can you find people who are in the doldrums? Of course you can. But does a vibe lead to a lack of action or a lack of spend? Or do we say one thing and do another?

We also read a lot about this “uncertainty”. The uncertainty is of course Donald Trump, because Trump is increasingly seen as insane.

It may well all end in tears, threatening tariffs on Europe one day then delaying it all until July the next.

Against this, the Reserve Bank Governor has to work out whether to drop the OCR by 25 or 50 basis points. If it's 50, does that gee us all up and out we go and fire things up? If so, then next thing you know inflation is sparked up.

Does he go 25 and hint at another 25, and may even another 25?

What does he say about inflation and its uptick already, not just here but globally? Do we have the growth to support any such uptick? Is the uptick driven by actual activity, or still people just putting their prices up?

As someone said, who on Earth would want to be Reserve Bank Governor? And our one isn't even under the constant threat of being fired.

Thank the good Lord that we indisputably have an export-led recovery of sorts. Meat and wine and kiwifruit are doing the business.

But that’s over there, over here we are still in a funk.

So, what to do? Your move Christian.

No pressure then.

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