Adam Clark

Thank you so much for having me.

Yeah, it's a really good question and it's really based on that common misconception around the OCR is directly tied to fixed rates.

And it's a really important kind of message to get across to people that actually the OCR affects funding costs directly but fixed rates are more based around the wholesale market's expectation of the OCR in the future.

And that's the real disconnect between the two, the OCR's all around costing now and whereas your ones to five, your fixed rates are around where the market thinks things are heading.

So at the moment it's only heading one way.

Yeah, exactly.

And if you break it right down to the basic mechanics, essentially rates go up in order to make things more expensive.

We then have less money to spend.

discretionary spending goes down, businesses can't put their pricing up, inflation's under control, is essentially the idea, right?

So when you look in the world at the moment, you go, okay, one of the core costs of production, i.e.

fuel, has gone through the roof.

And so we then go, okay, cost of production's going up, businesses are going to have to recoup that cost somewhere, and we've seen it already.

There's been temporary, short-term kind of pricing adjustments based on fuel.

But also the thing that people...

I don't know necessarily that they've got the heads around the fuel issue, is it's not just what goes in your car.

It's a core material and a huge amount of production.

Totally.

I mean, how much plastic is there in this world, right?

And it's almost entirely petroleum-based.

So the core kind of manufacturing costs of all of these products that we use day-to-day are all going to increase accordingly.