Nine To Noon RBNZ Governor speech 'central bank 101'
Mar 24, 2026
Cameron Bagrie, an independent economist who analyzes monetary policy and rates, explains central bank caution after one-off oil shocks. He breaks down direct versus indirect inflation effects. He walks through why swap rates and short-term mortgages move first. He discusses how banks pass on funding costs and where competition is weakest in lending.
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Central Bank 101 On One-Off Price Shocks
- Central banks should not react to one-off price shocks like oil spikes.
- Cameron Bagrie explains central bank 101: watch for second-round effects such as rising inflation expectations before tightening policy.
Direct Versus Second Round Inflation Effects
- The Reserve Bank differentiates direct and indirect effects versus pervasive second-round inflation.
- Direct effects (fuel into transport) are looked through; pervasive cross-economy price rises trigger intervention.
Why Swap Rates And Longer Yields Are Rising
- Swap rates are rising because markets now price earlier central bank moves and higher term premia.
- Global political and inflation uncertainty pushes up five- and ten-year yields as investors demand compensation.