Mike Jones: BNZ Chief Economist ahead of today's GDP release

An economist says another GDP contraction today would be in-line with the idea we've been in a rolling recession for almost two years.  

The March 2024 quarter showed just 0.2% growth.  

BNZ is picking a 0.4% contraction in the second quarter.  

Chief Economist Mike Jones told Ryan Bridge the Reserve Bank's anticipating a 0.5% contraction, so it would take a real clanger to throw it off course.  

He says the bigger piece of news for interest rates in New Zealand and the Reserve Bank might be what the US Federal reserve does with interest rates. 

LISTEN ABOVE 

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
A quarter to GDP numbers out today. They are looking backwards.
How much did we grow by as an economy or not.
We're joined by Mike Jones, b n Z Chief Economists.
Good morning, Mike, so am Z says back point one,
ASB back point three west Pac point four. What do
you say, Well, we don't.

Speaker 2 (00:20):
Think we're going to pay for pretty reading. Our pickers
are point four percent contraction over the quarter. So yeah,
pretty grim reading. And if we were right on that,
that would be the fifth quarterly contraction out of the
last seven. So very much in keeping with this idea
that we've been in a rolling recession for almost two
years now and.

Speaker 1 (00:40):
We're really feeling it. How important is the size of
this recession? You know, if if it's nearly a full percent,
I mean, obviously the Reserve Bank saying half a percent,
your same point four. If it was one percent, would
we see the Reserve Bank cutting rates? You know, bigger sooner?

Speaker 2 (01:00):
It's possible. Look, as you said, the Reserve Bank has
braced for a pretty nasty number already. They've got a
one point five percent decline baked into their numbers. That's
a bit weaker than what we've got and probably the
consensus as well, So it would take a real clanger,
I think, to throw the Reserve Bank off its stride.
Same there's better of volatile, So we'll just have to
see what we get. Probably today that the bigger piece

(01:23):
of news for interest rates in New Zealand and the
Reserve Bank may well be what the US feder Reserve
does with interest rates in.

Speaker 1 (01:30):
Just a few moments totally. We're all standing by for that.
Mike Hoskins Show will have coverage of that after six
o'clock obviously once the decisions out. But how might that
affect us.

Speaker 2 (01:42):
Well, we've obviously started the process of off cutting rates already.
The Reserve Bank has lower rates in August. This will
be the first cut from the US, so we ultimately
go our own way on instrate to the Reserve Bank
would be very would be the first to say that,
but FED a reserve is still very influential for interest rates.

(02:03):
Interest rates in New Zealand have been falling wholesale rates
over the past couple of weeks as we sort of
look ahead and baking in what's going on in the US.
So BED decides to get aggressive and cut take fifty points, Well,
that may just put a bit more pressure on interstrates
in this part of the world and may just embolden

(02:23):
that there result back here in New Zealand to do
the same.

Speaker 1 (02:27):
Interesting Mike, thank you for that. Mike Jones, Ben's in
chief economists that for.

Speaker 2 (02:31):
More from News Talks B listen live on air or online,
and

Speaker 1 (02:35):
Keep our shows with you wherever you go with our
podcast on iHeartRadio.