Latest / Best of Business / Christian Hawkesby: acting Reserve Bank Governor says there's reasons to be positive following latest OCR cut

Transcript

Christian Hawkesby: acting Reserve Bank Governor says there's reasons to be positive following latest OCR cut · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talk ZEDB. Follow
• 0:12
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• 0:17
  Speaker 2: The ocr has been cut. It's come down twenty five
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  Speaker 2: basis points to three percent, and the new projection is
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  Speaker 2: it'll be cut a couple more times to two and
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  Speaker 2: a half percent.
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  Speaker 1: Now.
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  Speaker 2: The Reserve Bank thinks we're through the worst with the recession,
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  Speaker 2: but didn't agree amongst themselves on how much to cut.
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  Speaker 2: Most of the committee today voted for twenty five basis points,
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  Speaker 2: but two of them voted for a double cut. Christian
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  Speaker 2: Hawksby is the acting Reserve Bank Governor High Christian Gooda.
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  Speaker 2: What makes you think that the worst is over?
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  Speaker 3: Because we've got with lowered interest rates a long way
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  Speaker 3: now we're sent out a pretty strong signal that we're
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  Speaker 3: willing to lower them further as required. We've got other
• 0:54
  Speaker 3: drivers of the economy like high commodity prices, and when
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  Speaker 3: you'll add that all up, we think that Q two
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  Speaker 3: was a bit of a blipping. With that support, we
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  Speaker 3: should be coming out at the other end around now.
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  Speaker 2: How long before or it feels better though, because I've
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  Speaker 2: been speaking to some people who are in business who
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  Speaker 2: think it might not be until the start of twenty seven.
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  Speaker 3: And absolutely, you know, just acknowledge also that it's a
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  Speaker 3: real two speed economy at the moment, and it does
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  Speaker 3: depend on who you talk to what part of the country.
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  Speaker 3: The regions are doing much better than the cities, particularly
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  Speaker 3: Auckland and Wellington are doing it tough at the moment.
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  Speaker 3: Some of the data is actually picking up in July,
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  Speaker 3: so we are seeing some of that data pick up.
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  Speaker 3: It might not feel like it's roaring through the middle
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  Speaker 3: of this year, but by the end of this year
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  Speaker 3: and into the beginning of next year, we think it
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  Speaker 3: will Okay.
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  Speaker 2: Do you think you made a mistake not cutting in July.
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  Speaker 3: No, we just you know, we're always reassessing the economy
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  Speaker 3: and where things are at. We saw early signs that
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  Speaker 3: things were faltering, and we center a signal in July
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  Speaker 3: that although we didn't cut, we were open to that.
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  Speaker 2: Shouldn't you have I mean, if you could see that
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  Speaker 2: things were faltering and you've cut now, you should have
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  Speaker 2: cut in July.
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  Speaker 3: The beauty of monetary policy as we meet every six
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  Speaker 3: weeks and that means we can change course, and we've
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  Speaker 3: changed course significantly. In August. We'll put out an ocr
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  Speaker 3: projection which is significantly down on May, and that's really
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  Speaker 3: provided a strong signal that interest rates are falling in
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  Speaker 3: there to support the economy.
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  Speaker 2: Were you in the camp twenty five basis points or
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  Speaker 2: fifty basis points?
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  Speaker 3: We don't disclose who voted what, but as chair of
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  Speaker 3: the committee, I speak to you the outlock and the
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  Speaker 3: risks and where we landed collectively.
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  Speaker 2: I think you've made a mistake not going for fifty.
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  Speaker 2: Do you think I'm wrong?
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  Speaker 1: Oh?
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  Speaker 3: Look, we had two members who were in your camp
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  Speaker 3: and their views were I think all of us acknowledged
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  Speaker 3: that there is a lot of there's both upside and
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  Speaker 3: downside risk around our central outlook.
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  Speaker 2: Tell me the upside risk, Christian, tell me what's the risk?
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  Speaker 2: And having gone for fifty, the.
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  Speaker 3: Risk is that Q two was an aberration, that it's
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  Speaker 3: a bit of a blip the economy kicks on. But
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  Speaker 3: also you've got to remember that inflation is rising and
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  Speaker 3: we're projecting CPI inflation to be at three percent.
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  Speaker 2: Yes, but you know that you need to look through
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  Speaker 2: it because what's happening to Golbal economy will bring our
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  Speaker 2: inflation down again.
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  Speaker 3: That yes, and you've got onto The argument for the fifty,
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  Speaker 3: the argument to do even no change is the risk.
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  Speaker 2: No never mind that I want you to tell me
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  Speaker 2: why not fifty because fifty is obvious.
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  Speaker 3: Two of our members voted for fifty and their view
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  Speaker 3: was around, you know, providing that strong signal and getting
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  Speaker 3: that kick start. The reason not to do fifty is
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  Speaker 3: that by doing twenty five end signaling, putting out a
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  Speaker 3: forward track that actually puts interest rates down to two
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  Speaker 3: and a half, we send out a strong signal, we
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  Speaker 3: get market rates moving, which they have. Market rates have
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  Speaker 3: lowered because we've surprised the markets today, and then we
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  Speaker 3: meet in six weeks time and things will go bigger,
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  Speaker 3: running faster or slower than the cure. Just adjust to that.
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  Speaker 2: Here's the thing you're going to cut in six weeks,
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  Speaker 2: so why not? Why not double cut today? This is
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  Speaker 2: a fighting charms Christian. There are businesses falling over today
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  Speaker 2: because of what is going on.
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  Speaker 3: It feels different in different parts of the country, and
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  Speaker 3: I think if we had we set interest rates for
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  Speaker 3: Auckland and Auckland only, they'd probably be lower than where
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  Speaker 3: we are. But we have to set interest rates for
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  Speaker 3: the for the whole country. There are some parts of
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  Speaker 3: the country that are doing quite well, and so we
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  Speaker 3: just have to look at that an aggregate Christian.
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  Speaker 2: Thank you so much for your time and to appreciate
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  Speaker 2: a Christian hawksby acting Resis Bank Governor.
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