Barry Soper: Newstalk ZB senior political correspondent on what the latest OCR cut means for the economy

The Reserve Bank has cut the OCR by 50 basis points to 2.5 percent, despite acknowledging inflation is still above where they'd like it.

Finance Minister Nicola Willis says they've factored in broader economic conditions.

She says the central bank clearly thinks any fluctuation in inflation will be constrained by spare capacity in the economy.

Newstalk ZB senior political correspondent Barry Soper says this will come as good news as more people are set to roll into lower mortgage rates.

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Episode Transcript

Speaker 1 (00:00):
Tory Farno has delivered her valedictory speech.

Speaker 2 (00:03):
We will deal with that shortlets thirteen away from five
and barries so for senior political correspondence in studio.

Speaker 1 (00:07):
Okay, the ocr what did you make of this?

Speaker 3 (00:10):
Well, I think what it did do was vindicate the
two on the Monetary Statement Committee that they voted for
fifty basis points last time round. And really what it
shows is that the Reserve Bank has been lagging behind
the economy. What it should be doing is injecting impetus

(00:32):
into the economy. And I think what it goes to
show hither is just how powerful the Reserve Bank is.
I mean, you know, we heard Adrian All saying he
is going to engineer a recession. He didn't know he's
going to engineer a couple of recessions. It could be,
so I say, good riddance, and now we've sort of
moved on from that. I've got to say the Finance

(00:53):
Minister was beaming from here to air after the announcement,
saying it's obviously great news for homo owners with mortgages
and for the economy in general.

Speaker 4 (01:03):
What we know is that over the next six months
around half of mortgage debt will roll off a high
interest rate, giving those people an opportunity for a lower
interest rate. So what that suggests is that we are
not yet feeling the full effect of interest rate reductions
that have already happened, and we should be able to
see accelerating relief over the coming months. The reason I
care about lower interest rates is I know that in

(01:24):
every economy in the world where you have lower interest rates,
people do better, and that's what we were elected to see.

Speaker 3 (01:30):
And stepping up to the mic just after Nichola Willis
was Labour's Barbara Edmunds. She was also enthusiastic about the
ocr drop today, saying she hopes it'll see inflation coming
down and making things generally more affordable.

Speaker 5 (01:44):
I'm comfortable seeing inflation coming down so that people can
afford food on their table. My concern again is that
inflation is biting hard on Kiwis who are feeling it
the most, and that's really at the grocery and in
those administered costs which they can't avoid.

Speaker 3 (01:57):
Yeah, and in the house it's of heather with lower
interest rates and more money flowing. The question Labors Chris
Hopkins asked the Prime Minister today would seem to be
a foregone conclusion.

Speaker 6 (02:10):
Mister speaker when he's been out and about why hasn't
he been talking to the businesses who say that hiring
staff is not their primary constraint for growth, given that
only four percent are saying that, whilst sixty three percent
of businesses, according to Enzi, are saying their real problem
is not enough customers.

Speaker 7 (02:28):
Well, the economy has been in a recession caused by
your reckless spending. You put the country into the biggest
recession in thirty five years. You've created the longest COVID
hangover of any in the western world. You actually made
sure that you tripled the debt for goodness sake, and
we now have a ten billion dollar interest bill. We're
cleaning up the labor government's mess.

Speaker 3 (02:49):
It's that simple, and I guess we're all hoping that
mess will be finally behind us at some stage. Heaven.
The interst rate bill for the government is going to
take a lot more time to.

Speaker 1 (03:00):
How much trouble at luxem and Willison with a pole
that puts them now in the.

Speaker 3 (03:04):
Twos Yes, I know, well just twenty nine point six percent.
You know, statistical margin of era is three percent but
having said that, it's not a good result for the
government clearly, and I think it bears out what the
general mood of the populace has been saying that things
are not looking good. The cost of living's too much.

(03:26):
That's the main concern in this poll. The economy second,
and you know, the Labor Party is slightly ahead and
the center left would be the government of an election
was held today, but center left with the Maori Party
and the Greens. The Greens lifted their rating as well,
I think, to twelve percent. So you know, I don't
know where they get all the support from, but they're

(03:47):
getting it. And Whatston Peters the biggest when they're in
those two point five percent.

Speaker 2 (03:51):
Look, it's protest numbers, right if it actually came to voting.
I don't know that the country is ready to re
elect Chippy because Chippy is part of.

Speaker 1 (03:58):
The one of the biggest reasons that we are in
the situation that we're in.

Speaker 3 (04:01):
But do does the voter have the memory? Yeah?

Speaker 1 (04:05):
I think so, I think so.

Speaker 2 (04:07):
I think the greater threat I still think the right
block wins, but I think the greater threat is that
the right block wins with the National Party much diminished
and the two supporting parties act in New Zealand.

Speaker 1 (04:16):
First figure, don't you think?

Speaker 3 (04:17):
Well?

Speaker 1 (04:18):
And that calls bar I mean, just.

Speaker 2 (04:19):
Think about the mechanism here, the mechanics of this right
that causes problems because then you've got a whole bunch
of National MPs in seats who losing on the list,
who losing that and want to lose their business.

Speaker 1 (04:28):
So then they do what.

Speaker 3 (04:29):
Well, I'm not going to do that. The side of
the election has not doubt about that.

Speaker 2 (04:35):
Okay, silence, I'm just leaving a pause. No, like leaving
a pause for dramatic effect.

Speaker 3 (04:41):
It's like I said, though, whether the drop the ocr
by fifty basis points today? Was I right or was
I right?

Speaker 4 (04:49):
No?

Speaker 1 (04:50):
That you and yeah anyway, so then what did the
Greens do? Tell me about the Greens?

Speaker 3 (04:55):
Well, Chloe Swarburg's been on the news a lot lately,
so today she was doing her best in Parliament, lecturing
the Prime Minister no less over the government's moves this
week against eighteen and nineteen year olds. On the doll
iss she is.

Speaker 8 (05:08):
Does the Prime Minister understand the basic mass that if
there are four job seekers to every job that is available,
in this country. All of his cuts to job seeker
support couldn't hope to possibly punish people into ghost jobs,
but will only deepen poverty and homelessness.

Speaker 2 (05:30):
Point of order, the Honorable David Symle.

Speaker 8 (05:32):
Now that's not actually a question designed to get information
for the public.

Speaker 7 (05:36):
It's an attempt at theater and making a speech. Well,
it'd be very clear attempts at theater are regular occurrency
this out on this side of the government. We care
about young people. We're not prepared to actually just have
them languishing and consign to welfare like a Labour Greens government.

Speaker 3 (05:52):
Well, the pole says it could be one, but you
never waned Barry.

Speaker 1 (05:55):
Thanks very much, Barry, so for seeing a political correspondent.

Speaker 6 (05:58):
For more from Heather Duplessy, Allen Drive, listen live to
News Talks.

Speaker 7 (06:02):
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