Jarrod Kerr: Kiwibank chief economist says the Reserve Bank needs to help boost recovery following latest unemployment data

Kiwibank says the latest unemployment figures are ugly, but in line with expectations. 

The unemployment rate rose to 5.1 percent in the December quarter - the highest it's been since September 2020. 

It's being blamed on a slow economy reducing demand and making employers trim jobs. 

Chief economist Jarrod Kerr says the Reserve Bank needs to do more to put New Zealand into recovery mode. 

"Interest rates are still restrictive - they're restraining households, they're restraining businesses, we're seeing it in the labour market, it's time to take some of that pressure off."

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Episode Transcript

Speaker 1 (00:00):
Right.

Speaker 2 (00:00):
The unemployment rate's gone up five point one percent in
the final quarter of twenty twenty four, up from four
point eight percent in the September quarter. Unemployment now the
highest it's been since September twenty twenty, that's when it
was five point two percent. Keep we Bank chief economist
Jared Curves with me, Jared, good evening, Good evening. So
this is what everyone was expecting. Does that mean we

(00:20):
can continue expecting that the interest rates will come down
in two weeks?

Speaker 1 (00:25):
Yeah, exactly. It came in line with expectations, but to
be fair, expectations are pretty miserable and it was an
ugly report, and it does suggest the Reserve Being needs
to do more to put this economy into recovery mode.

Speaker 2 (00:40):
More than what they told us they'd do, in other words,
more than half a percent.

Speaker 1 (00:45):
Absolutely. I think they'll deliver fifty in February, but we're
thinking about where they end this year. They're telling us
they'll cut to three and a half percent. We're telling
them we think they need to cut to three.

Speaker 2 (00:56):
Percent by when the end of the year.

Speaker 1 (01:01):
Yeah, by the middle of this year, end of this year.
The main point is that interest rates are still restrictive,
the restraining households, they're restraining businesses. We've seen it in
the labor market. It's time, it's time to take some
of that pressure off.

Speaker 2 (01:15):
Is there a point where you get so far in
a rut you can't even begin to see your way out?
And is that where we are now? In terms of
consumer confidence in spending.

Speaker 1 (01:26):
We were definitely in quite a rut last year. We
are somewhat optimistic that things turn around this year. I
think there's always a way to sort of dig your
way out of problems, and we certainly will do that.
It just takes more action from our policy makers.

Speaker 2 (01:47):
Growth. I've been looking at the numbers from the Reserve
Bank and from Treasury. They reckon, we're going to go.
This is Treasury from half a percent growth through till June,
so barely registering to three point three percent by June
twenty twenty six. Does that sound highly optimistic to you.

Speaker 1 (02:04):
It's kind of in line with what we're expecting. You know,
these rate cuts come through, they'll feed through over the
next six months. You're working off a very low base,
so very low levels, and you start seeing a recovery
into twenty and twenty six and yeah, we're sort of
pitching the idea that we'll see two to three percent

(02:24):
growth rates into twenty twenty six. It's definitely possible. And
you know something, we hope that we will see.

Speaker 2 (02:32):
I certainly hope we do too. Thanks so much for
your time, Jared Jared Kirk Keepy Bank chief Economists. For
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