Jarrod Kerr: Kiwibank Chief Economist ahead of the final OCR announcement of 2025

The Reserve Bank's set to slash the Official Cash rate today but the big question is whether today's cut will be the last. 

The final OCR decision of the year is set down for 2pm. 

Most economists expect the cash rate to be cut 25 basis points – from 2.5% to 2.25%. 

Kiwibank Chief Economist Jarrod Kerr told Mike Hosking the main message seems to be that we’re getting pretty close to the bottom. 

He says interest rates are at stimulatory levels and they’re looking to see if that will entice some investment.  

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Episode Transcript

Speaker 1 (00:00):
Final ocida for the year, and what a year of OCRs.
It's been a twenty five points baked in. We think
the big question is is there more where that came from?
Or will Christian on his way out to new pastures
suggest that this is that. Jared Kerres Kibibank chief economist,
of course, and his back with this, Jared, Morning, Morning.
You've got twenty five with more or twenty five and
thanks for coming twenty five.

Speaker 2 (00:21):
And let's say if that's enough. I think we're getting
pretty close to the bottom. I think that's the main message.
Interest rate through its stillatory levels, and we're looking to
see if that's going to entice some investment.

Speaker 1 (00:33):
How nervous of the three percent inflation.

Speaker 2 (00:36):
A, I'm not not at all. I think we can
look through some of the short term spikes. We actually
have inflation falling below two percent to about one point
eight percent next year, so there's a lot of deflationary
pressure coming through, particularly from a late really weak labor market.

Speaker 1 (00:57):
Okay, so if you're right at one point eight's, and
let's credit you right here and right now, you've been
right all along with this, So congratulations on that. At
one point eight If you're right and things aren't firing up,
Are we back into the business of talking about increases
in the cash rate?

Speaker 2 (01:14):
Well, I think if we're struggling to see inflation, then
they'll keep in traits loads longer. I think the risks
that are things, you know, sort of bounce back a
little quicker, And wouldn't that be nice? And if we
start talking about rate hikes in the second half of
next year, then that means job's done and their economy
is performing.

Speaker 1 (01:31):
Well, what weight do you place on if Christian, If
you're right and Christian goes today, we're done, Thanks very much.
I've got a new job, in a new life. Twenty
five Is that buy bye? How many people in this
country go?

Speaker 2 (01:41):
Right?

Speaker 1 (01:41):
That's as good as it gets. I'm now going to move.

Speaker 2 (01:44):
I'm going to act, hopefully a few, hopefully a few, Mike.
I mean a lot of people are rolling off their mortgages.
Now we've got a large chunk of our mortgage book
rolling on too much lower rates. That's certainly helping household budgets.
And I'm just hope entices people to, yeah, get back
out into the market, get active again. And more importantly,

(02:06):
we need businesses investing.

Speaker 1 (02:08):
The Auckland shift of lake. Do you see that as
being real some of the numbers in the vibe we're
hearing in Auckland the engine room of the economy.

Speaker 2 (02:16):
Yeah, I do. We are seeing some green shoots and
pockets of the economy, which is nice. But we saw
these sorts of green shoots this time last year and
they withered away. So you know, green shoots is one thing.
Activity is another. We really need to see activities lifting
into next year before I gained confidence.

Speaker 1 (02:35):
Good only Jared nice to catch up. Appreciate it very much,
Jared Kurt the Quewi Bank chief economists Christian Hawksbeck, what
will be one of his final interviews before he goes
off and to do whatever Christian Hawksby is going to
do in the rest of his life, will be on
the program roughly this time tomorrow. For more from the
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