Episode Transcript
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Speaker 1 (00:00):
Now.
Speaker 2 (00:00):
Kiwibank says if it was up to them, the ocr
would be going down all the way to three percent
on Wednesday. The cash rates currently at three and a
half percent. The Reserve Bank is widely expected to cut it.
Jeri Kerr is Kiwibank's chief economist.
Speaker 1 (00:12):
Hi Jared Good evening, what.
Speaker 2 (00:15):
Do you expect in just twenty five basis points on Wednesday?
Speaker 1 (00:19):
I'll delivered twenty five. But they should lower the rack
and they are willing to cut below three percent? Does
the economy needs stimulus not restraint?
Speaker 2 (00:29):
Why is there so much uncertainty about where this track
is going.
Speaker 1 (00:34):
Well, there's a lot of uncertainty offshore. So the way
we're looking at it is that these tariffs, no matter
how much they get dialed back and turned back towards
ten percent, still a tariff across the world. Still slower growth.
We think that's a negative and we also think it
puts deflationary pressure on the economy. So yeah, we don't
(00:57):
agree with the risks of upside.
Speaker 2 (01:01):
What does the budget do do you think for the
Reserve Bank? Does it give it latitude to cut deeper?
Speaker 1 (01:06):
Yeah, it does. You have a government that is doing
a little bit with the with the invest boost, which
is great, but that won't that won't you change the
dial too much. They are not pumping a lot of
money into the economy at all, and they've got quite
a lot of restraint later on. So it actually falls
into much of policy to do something to get this
(01:28):
economy going.
Speaker 2 (01:29):
Okay, So when do you think you reckon? It needs
to bottom out about two and a half percent, is
that right?
Speaker 1 (01:35):
Yeah?
Speaker 2 (01:36):
And when.
Speaker 1 (01:38):
The early is possible by the middle of this year.
We have a theoretical number for neutral, which is a
rate that doesn't hurt, doesn't stimulate, and that's about three.
So sitting at three and a half now, we're actually
still in territory where interest rates are restraining growth, even
though we've been through a recession. So we're saying, actually
get it into stimatory territory and you know, let's kick
(01:59):
start there kind of into next year.
Speaker 2 (02:00):
Jared, it's always good to talk to you. Thank you, mate.
That's Jared kirk hue, Banks, chief economist. For more from
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