spinofflive
The Reserve Bank’s commentary yesterday was described as “dovish” for the first time in a while (Image: Getty, additional design by Archi Banal)
The Reserve Bank’s commentary yesterday was described as “dovish” for the first time in a while (Image: Getty, additional design by Archi Banal)

The BulletinMay 25, 2023

And with that, the OCR hike season comes to an end

The Reserve Bank’s commentary yesterday was described as “dovish” for the first time in a while (Image: Getty, additional design by Archi Banal)
The Reserve Bank’s commentary yesterday was described as “dovish” for the first time in a while (Image: Getty, additional design by Archi Banal)

Probably. The Reserve Bank stuck with its forecast of the OCR peaking at 5.5% but still managed to deliver shock and orr with its commentary, writes Anna Rawhiti-Connell in this excerpt from The Bulletin, The Spinoff’s morning news round-up. To receive The Bulletin in full each weekday, sign up here.

‘Dovish tone’ surprises

For maybe the first time since I started writing The Bulletin and covering official cash rate (OCR) announcements, I can finally use the word “dovish”. The hawks have left the building. If you’re still wondering what these economic bird analogies mean, here’s what I read when I started this gig and could no longer pretend I knew what the bird words meant. The Reserve Bank (RBNZ) announced a lift in the OCR by 25 basis points to 5.5% yesterday afternoon and said the OCR hike cycle that started in October 2021 has likely ended after 12 consecutive rate hikes. Though the bank was just sticking with its November forecast of 5.5% as the peak OCR, the markets and many commentators were surprised by the bank’s “dovish” tones after expecting government spending and net migration figures to be assessed as inflationary, and therefore requiring the OCR to go as high as 6%. If “dovish” isn’t the word for you, you can always run with “chill”, as Tom Pullar-Strecker has done in The Post (paywalled), when describing the RBNZ’s assessment of the economic outlook.

Chart showing OCR rates since 2000 to May 2023
Source: Reserve Bank of New Zealand

Consumer spending slowing

Unusually, the Monetary Policy Committee took the decision to a vote with two of the seven voting members wanting no increase at all. In a statement the committee said “the level of interest rates are constraining spending and inflation pressure” and inflation pressures at home and abroad have been easing. It pointed to slowing consumer spending which was supported by the latest retail spending data from Stats NZ  that showed the total volume of retail sales falling by 4.1% in the March quarter. Unlike Treasury, the bank is still forecasting a recession but a very shallow one in the June and September quarters this year.

What does it mean for homeowners?

As Stuff’s Susan Edmunds reports, economists think home loan interest rates are probably about as high as they are going to get. Kiwibank chief economist Jarrod Kerr said wholesale markets had priced in an OCR peak of nearly 6% in the past week. While the RBNZ doesn’t see a lowering of the OCR until September 2024, most economists are expecting home loan rates to start to drop in early 2024. However, as BusinessDesk’s Rebecca Howard reports (paywalled), many economists are also saying that despite the forward guidance from the RBNZ, they think a further OCR hike could be possible. At this point, we throw up our hands and place our fate in the lap of the Gods.

RBNZ relaxed on government spending and migration

In The Post this morning (paywalled), Luke Malpass describes yesterday’s rate hike as one “that didn’t realise the worst fears of Labour Party strategists” with the RBNZ essentially giving the budget a “pass mark”. RBNZ governor Adrian Orr described fiscal policy as “more of a friend than foe to monetary policy”. Malpass writes that the RBNZ has basically assessed that the government will spend a bit more than the central bank expected in February but that the size of government spending as a portion of the economy will contract over the next few years. Cyclone recovery and repair spending, rather than other discretionary budget spending, seems to be the drive behind the short-run spending assessment. Crucially, for all of us who have lived with a small Orr in our ears every time we took out our wallets, Orr said we’d cooled the jets.

Keep going!
An image created using AI and the prompt “a happy dog being prime minister of New Zealand in front of the Beehive in Wellington, New Zealand holding a New Zealand flag”
Image created using Bing Image Creator – a clearly fake, if not a beautiful imagined future

The BulletinMay 24, 2023

The era of AI political campaigning is here

An image created using AI and the prompt “a happy dog being prime minister of New Zealand in front of the Beehive in Wellington, New Zealand holding a New Zealand flag”
Image created using Bing Image Creator – a clearly fake, if not a beautiful imagined future

It arrives not with a robotic roar, but with the leader of the National party being unsure whether his party is using AI while a spokesperson confirms they are, writes Anna Rawhiti-Connell in this excerpt from The Bulletin, The Spinoff’s morning news round-up. To receive The Bulletin in full each weekday, sign up here.

National using artificial intelligence to create attack ads 

As Stuff’s Andrea Vance writes, “It’s the wonky eyeball that gives it away. In the Instagram photograph, a woman stares out the window into a dark street.” Vance is referring to an image posted on the National party’s Instagram account attacking Labour’s “soft on crime” approach and it’s been generated using artificial intelligence (AI). Vance reports that in the last month, National has published at least four images generated by AI to its social media accounts with a spokesperson confirming they were using it as “an innovative way to drive our social media”. Yesterday, party leader Christopher Luxon was unclear about National’s use of AI in its attack ads saying, “No, not that I’m aware of,” when asked if the party was using it.

AI image and text generation now in the hands of everyone

On Monday, a fake image which CNN describes as bearing “all the hallmarks of being generated by artificial intelligence” purported to show an explosion near the Pentagon. It was shared by multiple “verified” Twitter accounts on Monday, leading to a brief dip in the stock market. It was fake. This is a confluence of problems. “Verified” on Twitter now means nothing more than someone paying for a “verified” account — it is no badge of authenticity. The capacity to create these kinds of images now lies in the hands of everyone. I used Bing Image Creator to create today’s feature image. It took me five seconds using the prompt: “a happy dog being prime minister of New Zealand in front of the Beehive in Wellington, New Zealand holding a New Zealand flag”. As you can see, it’s not the Beehive, nor the New Zealand flag and that suit fit is a travesty. I chose not to enter prompts that might bear a resemblance to reality for the sake of trust and truth. It’s just me imagining a beautiful future.

AI being explored by Electoral Review panel here

As this AP news piece highlights, AI experts can very quickly name a number of scenarios in which AI is used for the purposes of confusing voters, slandering a candidate or even inciting violence. The news cycle is awash with these stories and warnings. Two months ago, psychologist and AI commentator Paul Duignan said there was every reason to think AI would be used in the New Zealand election and so it has come to pass. It’s a topic being explored by the Government’s Independent Electoral Review panel. The first report from that review is not due until June. Far be it from me to suggest that once-in-a-generation review of electoral law be rushed, but to quote the Gershwins, some might suggest it’s time for them to “put on some speed”.

Should we be asking for disclosure from our political parties?

In the US, a bill was introduced at the beginning of the month that would require political groups or campaigns to disclose the use of content created by AI in political ads. Here, our educators and education officials are being proactive about developing guidelines and policies for how generative AI is being used in the education system. The Ministry of Education just published a set of guidelines. In the absence of any formal regulation of the use of AI in political campaigns, a set of cross-party guidelines or an agreement about disclosure might be a decent stop gap with the election only five months away. Discussing it in the context of US law and the 2024 US election, Matthew Ferraro, a cybersecurity lawyer, suggested it was a good way to go.