Andrew Dickens: The Reserve Bank can't wait around any longer to cut the OCR

So yesterday I outlined the reasons why the Reserve Bank might not cut interest rates.  

I got that wrong.  

They chopped the rate by the expected half a percent with immediate relief for mortgage holders.  

What we try to do with the Reserve Bank is read behind the lines and figure out what they freely mean for our day-to-day life. 

This is what I think they’re saying, times have been tough.  

But you’ve been sitting on that couch for 15 years.  

You wanted to replace it 5 years ago, but everything went so crazy that you called tai hoa until times were better. 

The Reserve Bank then says times are as good as you’re going to get anytime soon so buy that couch.  

But please buy a New Zealand made one.  

They admit there are future risks, but they promise to keep a close eye on it.  

We’ve got a furlough. So, let’s get cracking.  

We can wait for the government to tell us what to do.   

But that’s not the New Zealand way.  

We need to work for every dollar we can find but we must also realise that the dollars we’ve got need to be in the washing machine, that is our monetary system.  

And that's exactly what the Reserve Bank is hoping for. 

That we will loosen the strings around our purse book and spending will increase as the year goes on. 

Meanwhile we hope and pray that global conditions treat us kindly.  

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Episode Transcript

Speaker 1 (00:00):
So yesterday on the show, I outlined the reasons why
the Reserve Bank might not cut interest rates or lower
them by zero point two five percent, and I got
that wrong because they chopped the rate by the expected
half a percent with immediate relief for mortgage holders. What
we try to do with the Reserve Bank is now
read behind the lines and figure out what they really
mean for us in our day to day life. And
we'd like to hear that in real language. So this

(00:21):
is what I think they're saying. They're saying times have
been tough, but you've been sitting on that couch for
fifteen years. You wanted to replace that couch five years ago,
but everything went so crazy that you called ty hoe
until times were better. The Reserve Bank then says, well
times are better. Well, times actually are as good as
you're going to get anytime soon, So buy that couch

(00:42):
and please buy a New Zealand one. In this statement,
they admit there are future risks, but they promised to
keep a close iron it. But we can't just sit
in our hands. So we've got a bit of a furlough,
so let's get cracking. We can wait for us someone
to tell us what to do like a government, but
that's not the New Zealand way. We just need to
get out there and do it. We need to work
for every dollar we can find. We also need to
realize that the dollars we've got need to be in

(01:03):
the washing machine that is our monetary system. It helps
no one if you sit there cautiously, and I think
that's what the Reserve Bank is hoping for, that we
will loosen the strings around our purse book and spending
will increase as the year goes on, but not by
too much. Don't go crazy, just keep it all balanced. Meanwhile,
everyone's going to hope and pray that global conditions treat

(01:24):
us kindly. For more from Early Edition with Ryan Bridge,
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