Cameron Bagrie: Independent Economist on Kiwibank blaming the Reserve Bank for rising interest rates

Kiwibank says it's on with a 2.4% GDP increase for 2026.

But the bank has joined the chorus blaming the Reserve Bank for messing up the communications leading to increased fixed-term rates at the major retail banks.

Independent Economist Cameron Bagrie told Heather du Plessis-Allan that the economy is slowly stabilising, and because of that interest rates don't need to be as low. 

"When you turn the corner, interest rates don't need to be as low."

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Episode Transcript

Speaker 1 (00:00):
Yet another bank is picking a decent recovery this year.
It's Keiwibank says it's on with a two point four
percent GDP increase for twenty six. But the bank has
joined the chorus blaming the Reserve Bank for stuffing up
the comms leading to increased fixed term rates at the
major retail banks. Independent economists and founder of Baggery and
the Economics, Cameron Baggery is with us Morning.

Speaker 2 (00:19):
Cam, good morning.

Speaker 1 (00:21):
Is it as simple as Key Bank has made it?
And to be fair, most of us by blaming the
Reserve Bank for this?

Speaker 2 (00:28):
No wholesale interest rates started to move up in advance
of the reserve banks, sort of what we call pivot
and their latest monetary policies happened. What's the victim here?
You know? What's how do we point the finger out?
We point the finger at an economy that's actually starting
to show a little bit of a heartbeat. Yeah. Our
sales are up quite strongly. Construction activities started to move

(00:52):
back up, albeit of a low base. If you look
at business lending, it started to move up as well.
Tract the sales are moving up. Ours work were positive
as well. We had a horror GDP number in Q two,
we're going to get a decent rebound in Q three,
there's the economy knocking the ball out of the park.
The answer is no, we're still struggling overall, but we've

(01:13):
turned the corner. When you turn the corner, interest rates
don't need to be as low. So what we've seen
is it interest rate markets have just repriced how much
stimulus will support that they think the Reserve Bank needs
to give us over the next sort of twelve months.

Speaker 1 (01:26):
What are you pecking next year is going to be like?
Is it going to be blockbuster growth or is it
going to be a little bit more like what Simon
Bridges are saying, which is it's going to be growing,
but it's not going to feel all together that flash
because of the election and various other things.

Speaker 2 (01:40):
Oh, election, a whole lot of other factors. Look, there's
an awful lot of stimulus that's in the pipeline. The
rural sector is obviously meant doing pretty well. They haven't
fully opened the checkbook yet. Dairy prices started to recede,
so they'll probably cre a little bit about plan spending back.
We've got to find pierre injection. You've got the impact

(02:01):
of loan registraits that there's a whole lot of cyclical
support in the pipeline that's going to have us moving forward.
The problem, Heather, is that we've still got all these
structural problems. You've got problems across the education set, You've
got problems across infrastructure, road cone oiitus. The biggest, biggest
issue is just weak productivity growth. We've become a very
inefficient nation over the last sort of twelve months. The

(02:24):
biggest issue, or the biggest concern I've got is that
we're going to stare pick up and demand that's baked in.
The concern I've got is that do we have the
supplies of capacity to absorb that demand by the utilization
of resources. Because if we do not have a capacity
to absorb demand, the Reserve Bank is going to see
inflation sticking up around three percent and that will be

(02:44):
a problem.

Speaker 1 (02:45):
Now listen very quickly, you're doing the debate.

Speaker 2 (02:48):
I'm not quite sure, but at the moment, I think
my name has been put down on the table to
moderate from one side. We're just waiting for acceptance on
the other side. And regard that a weather I'll be
a moderator.

Speaker 1 (03:00):
Suspice I we'll see you again this week, Cameron, Thanks
very much. Cameron Bagriy Independent Economists, founder of Baggriy Economy
Economics and might be the moderator of the Ruth Richardson
Nichola Willis Debate. For more from the Mic Asking Breakfast,
listen live to news talks.

Speaker 2 (03:13):
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