Nicola Willis: Finance Minister on Reserve Bank cutting the OCR

A steady slide to the OCR is gently flowing through to households. 

The Reserve Bank's cut the cash rate from 5.5% to 3% over the past 13 months and is also signalling further possible cuts on the way. 

Assistant Governor Karen Silk says many people have been fixing on higher short-term rates while they hold out for lower long-term rates. 

Finance Minister Nicola Willis told Ryan Bridge it’s important that monetary policy can stimulate the economy, and the Reserve Bank has made a clear decision to ensure interest rates can fall further. 

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Episode Transcript

Speaker 1 (00:00):
So the OCI was cut twenty five, not fifty points
to three percent yesterday. A split decision means two of
the committee members wanted to go bigger and go hard
at four in club twenty five and this was the
big news yesterday. Really they've signaled down to two and
a half percent potentially by Christmas. We also found out
inflation expected to hit three percent for the September quarter.
Nikola Willis, as the Finance Minister, joins me this morning,

(00:22):
Good morning.

Speaker 2 (00:23):
Good morning man.

Speaker 1 (00:24):
So they didn't cut both fifty a third of them
think we needed to.

Speaker 2 (00:30):
Do.

Speaker 1 (00:30):
You are they doing the heavy lifting that you have
said that they need to do.

Speaker 2 (00:36):
It's really important that monetary policy can stimulate the economy
and that's what the Reserve Bank made a very clear
decision to do tomorrow was ensure that interest rates can
fall further so that people are paying less for their debts,
so there's more money in people's pockets, so they can
be more money circulating in the economy, generating activity, jobs, growth,

(01:00):
all of the things we want to see.

Speaker 1 (01:02):
We have businesses going to the wall, we have people
cutting back on groceries because they're so expensive. We know
that we've had a faulted recovery in quarter two, Does
the strengthen an argument for you to get involved and
do a bit of stimulus.

Speaker 2 (01:17):
Well, we're very weare of all of those pressures, which
were exacerbated in the second three months of this year
following the Trump tariffs. What our Reserve Bank is very
clear about in their full statement which they released yesterday,
is that the government, by controlling its own spending, is
keeping pressure off inflation, allowing the Reserve Bank to deliver

(01:38):
these interesst rate reductions. It's my view that in the
absence of control government spending, it would be very difficult
for the Reserve Bank to keep reducing interrast rates, and
that would be a real constraint on some sectors that
I think we all are concerned about. You know, construction.
Construction projects get over the line where interest rates are
low enough that people are prepared to take on the

(01:59):
debt to find those projects. So totally agree to the future,
this is going to be now demand to the economy.

Speaker 1 (02:06):
You need demand. You need people who are actually out
there going wanting to buy things, wanting to buy property.
We just talked about Fletcher's on the show. I mean,
so there's no, just for the absence of doubt, you're
ruling out any mid year mini sprinkle stimulus if even
reprioritize money doesn't have to be new money.

Speaker 2 (02:22):
Oh, I'm absolutely not ruling that out. We will continue
to be taking additional actions to stimulate activity in the economy.
What I'm saying is that this is not a time
that we will be continuing to drive up additional debt. Well,
you've seen us continue to make announcements and deliver policy change,
but more than that, and that will continue. That will continue, right.

(02:45):
You will continue to see from the government actions which
we believe will stimulate activity, will give people confidence to invest,
will give people in nevi to take on your soon listen,
will continue to see that.

Speaker 1 (03:00):
Why are you rewarding tantrums?

Speaker 2 (03:05):
Whose tantrument I rewarded? That's not been my parenting approach.

Speaker 1 (03:08):
Well, I wouldn't have thought it was. So the teachers.
We had Judith Collins come out and say the teachers
are throwing are wobbly throwing a tantrum? Yesterday Brian Roach
says we're now reviewing our offer. Oh.

Speaker 2 (03:23):
Look, we've always said in order to get a deal
over the line with the teachers, which I think everyone wants.
They need to be at the bargaining table. Now, what
happens at the bargaining table is you negotiate in good
faith to get an outcome that can work for everyone.
How disappointment the tantrum which Judith Colins rightly referred to
was the PPTA walking away from negotiations after only six

(03:45):
days at the negotiating table.

Speaker 1 (03:46):
And look what against a very good goes Look what
it gives them a reviewed offer.

Speaker 2 (03:51):
Well, we have always been in a position that we
want to negotiate. Now, if the PPTA want to play
games and are more focused on their social media campaign
than actually representing their workers sitting at the table to
get a deal, that's on them, that's not on us.

Speaker 1 (04:05):
Where does the money come from the extra money? Because
I think one point seven billion is what they were asking.
Do you have to borrow for that? Is that existing baselines?
Is it reprioritize this reviewed offer? Where does that money
come from? The extra money?

Speaker 2 (04:18):
Well, well, Ryan, I think you're making an assumption about
what the components of the reviewed offer are and I
wouldn't do that. But of course, like every government before us,
we have set an envelope for this negotiation that some
is confidential, and we will be working within that envelope
because of course, I think people understand there are trade
offs here. In this year's budget, we delivered a record

(04:41):
package of learning support for children with additional needs that
will support additional teacher aides, supports and classrooms. Well as
we actually blow the negotiating budget on the teachers, those
things are going to be much much harder to fund
now and into the future. So this is all about
getting a deal that delivers for students, delivers for families,
and yes lothers for teachers who we value very much.

Speaker 1 (05:01):
As people are listening to this this morning, they're hopefully
putting butter on their hosts. Many won't be. You have
congratulated night and day for selling butter at six dollars fifty.
That's apparently they're losing three bucks on every block. You've
said food stuffs and wool worse have the same option,
you'd encourage them to lower prices. I had food Stuffs
on my Herald Now show on Monday. They said they

(05:23):
are making a loss on the home brand butters that
they sell for eight dollars twenty nine. Did you realize that.

Speaker 2 (05:30):
I listened to your show, Ryan, and this is the
kind of commercial behavior that you want to see. I
think all of us want to see retailers competing hard
against each how they which sometimes involve for having one
product or a whole range of products where they're selling
below costs because they know that they will recruit some
profits in other areas and other products that they are selling.

(05:51):
And my point's always been the more competitive the marketers,
the more you've got night and days and other entities
snapping at the heels of the big guys, more likely
you are to get those sorts of offers. All I
want is the best deal for Kiwi shoppers, and I
continue to believe more competition will support that.

Speaker 1 (06:07):
All Right, Nicholas Willis appreciate your time this morning the
Finance Minister.

Speaker 2 (06:11):
For more from earlier edition with Ryan Bridge.

Speaker 1 (06:13):
Listen live to News Talks at b from five am weekdays,
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