Christoph Schumacher

But the Reserve Bank knows very well that the domestic inflation can't be changed by changing the OCR.

And we have just seen the latest announcement.

The Reserve Bank Governor kept the OCR where it was.

There was no increase because normally external shocks like the oil crisis, Reserve Banks don't tend to overreact and quickly increase the OCR because the expectation is that it will normalize and an understanding that changing the OCR won't change our domestic inflation.

So we have seen this and it wasn't

Interesting time, because it was the first time our new Reserve Bank governor had to make a crucial decision.

And it was an easy one, because increasing the OCR would have meant killing the little bit of growth we had anyway.

But as you said, the inflation rate has gone outside the band, the 1% to 3%.

the 2% we target.

So there could have been a response from the Reserve Bank governor by saying, well, I care more about inflation than about the economy because the economy is the government's responsibility.

Inflation is the Reserve Bank's.

She didn't

increase the OCR.

So there's a signal that our Reserve Bank is encouraging growth.

Possibly in the next round, we will still not see an increase in the OCR.

So there's an acute awareness of what changing the interest rate does to the economy.

And as you said, it's not just your mortgage rate that's one part, but business spending is another huge part.

Businesses respond much, much quicker than individuals to changes in the OCR.

If the OCR goes up, what we tend to do is we save a bit on the things we don't necessarily need.

We go out less often for dinner, maybe less to the movies, but we find ways.