Latest / Best of Business / Jarrod Kerr: Kiwibank chief economist ahead of the next OCR announcement

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Jarrod Kerr: Kiwibank chief economist ahead of the next OCR announcement · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks'd be follow
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  Speaker 2: Now.
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  Speaker 3: Kiwibank says, if it was up to them, the ocr
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  Speaker 3: would be going down all the way to three percent
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  Speaker 3: on Wednesday. The cash rates currently at three and a
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  Speaker 3: half percent. The Reserve Bank is widely expected to cut it.
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  Speaker 3: Jared Kerr is Kiwibank's chief economist. Hi Jared Good evening,
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  Speaker 3: what do you expect in just twenty five basis points
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  Speaker 3: on Wednesday?
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  Speaker 2: I'll delivered twenty five, but they should lower the rack
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  Speaker 2: and they are willing to cut below three percent. Does
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  Speaker 2: the economy needs stimulus not restraint?
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  Speaker 3: Why is there so much uncertainty about where this track
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  Speaker 3: is going.
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  Speaker 2: Well, there's a lot of uncertainty offshore. So the way
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  Speaker 2: we're looking at it is that these tariffs, no matter
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  Speaker 2: how much they get dialed back and turned back towards
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  Speaker 2: ten percent, still a tariff across the world, Still slower growth.
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  Speaker 2: We think that's a negative and also think it puts
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  Speaker 2: deflationary pressure on the economy. So yeah, we don't agree
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  Speaker 2: with the risks of upside inflation.
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  Speaker 3: What does the budget do? Do you think for the
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  Speaker 3: Reserve Bank. Does it give it latitude to cut.
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  Speaker 2: Deeper, Yeah, it does. You have a government that is
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  Speaker 2: doing a little bit with the invest boost, which is great,
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  Speaker 2: but that won't that won't change the dial too much.
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  Speaker 2: They are not pumping a lot of money into the
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  Speaker 2: economy at all, and they've got quite a lot of
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  Speaker 2: restraint later on. So it actually falls into much of
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  Speaker 2: policy to do something to get this economy going.
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  Speaker 3: Okay, so when do you think you reckon? It needs
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  Speaker 3: to bottom out about two and a half percent, is
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  Speaker 3: that right? Yeah, and when.
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  Speaker 2: The early is possible by the middle of this year.
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  Speaker 2: We have a theoretical number for neutral, which is a
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  Speaker 2: rate that doesn't hurt, doesn't stimulate, and that's about three.
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  Speaker 2: So sitting at three and a half now, we're actually
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  Speaker 2: still in territory where interest rates are straining growth, even
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  Speaker 2: though we've been through a recession. So we're saying, actually
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  Speaker 2: get it into stimulatory territory and you know, let's kickstart
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  Speaker 2: the economy into next year.
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  Speaker 3: Jared, it's always good to talk to you. Thank you, mate.
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  Speaker 3: That's Jared kirk hue, we Bank's chief economist.
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