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Jarrod Kerr: Kiwibank chief economist issues warning after GDP figures unveiled · Best of Business

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  Speaker 1: You're listening to a podcast from news Talk zed be
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  Speaker 2: So good economic news for US today. GDP is up
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  Speaker 2: by even more than we thought it would be. The
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  Speaker 2: economy grew zero point eight percent in the first quarter
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  Speaker 2: of the CNL. Unfortunately, most commentators don't think quarter two,
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  Speaker 2: the one we're in right now, will be quite so good.
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  Speaker 2: Jared kurrs Kiwibank's chief economist, Hi Jarrett, Hi, did you
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  Speaker 2: take some heart from this?
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  Speaker 3: Oh? Look at a good report. It showed we had
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  Speaker 3: a bit of momentum coming into the year, shows the
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  Speaker 3: primary sector, you know, farmers are doing well. But as
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  Speaker 3: you suggested, just before it's the second quarter where things
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  Speaker 3: start to unravel.
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  Speaker 2: Yeah, what about before we go into the second quarter?
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  Speaker 2: What about the fact that we actually, for the first
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  Speaker 2: time in feels like ages saw the capita GDP rising
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  Speaker 2: by zero point five percent.
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  Speaker 4: How much heart should we take from that?
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  Speaker 3: Yeah, it's good. Like I said, it was a good
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  Speaker 3: report for the first quarter. You know, it's nice to
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  Speaker 3: see parts of the economy growing again. So yeah, look
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  Speaker 3: we think it's a good report.
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  Speaker 1: Yep.
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  Speaker 2: Okay, So, as you say, second quarter not looking so flash.
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  Speaker 2: So taking those two things combined, what does this mean
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  Speaker 2: for the next Reserve Bank meeting?
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  Speaker 3: Yeah, so the data that we talked about was for
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  Speaker 3: the first quarter. Obviously it predates Trump's tariff announcements, which
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  Speaker 3: have thrown a whole lot of uncertainty into the air.
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  Speaker 3: And it also predates the recent spike on oil prices.
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  Speaker 3: So all of this is having attacks on consumers around
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  Speaker 3: the world and here in New Zealand. You know, food
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  Speaker 3: prices are up, energy prices are up, and now petrol
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  Speaker 3: prices will rise. So that's going to stretch household budgets
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  Speaker 3: even further.
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  Speaker 4: So what do you think, do we get a cut?
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  Speaker 3: Oh, we need a cut, we need three. In fact,
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  Speaker 3: the Reserve Bank absolutely, I think that the interest rates
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  Speaker 3: sensitive parts of the economy haven't recovered and they're really struggling,
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  Speaker 3: and we need support. We need an economy running closer
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  Speaker 3: to its capacity. We're well below that at the moment.
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  Speaker 3: And I think it proves that interstrates just haven't, Okay, Jared,
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  Speaker 3: really had an impact.
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  Speaker 4: I mean, I agree with.
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  Speaker 2: You on that, but that is actually not the Reserve
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  Speaker 2: Bank's job, right. The Reserve Bank's job is to deal
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  Speaker 2: with inflation. Inflation is creeping up towards the top of
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  Speaker 2: the band, can they take that risk?
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  Speaker 3: So that's a short term thing. So we think inflation
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  Speaker 3: spikes now basically, but over the medium term it's headed
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  Speaker 3: back to two and on our forecast it actually falls
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  Speaker 3: below too. So we're concerned about the medium term and
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  Speaker 3: that is their mandate inflation over the medium term, and
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  Speaker 3: it's falling whither. It's heading south, so I think they
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  Speaker 3: should be a bit more proactive and get their economy
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  Speaker 3: running again.
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  Speaker 4: Good stuff, Jered, Always good to talk to you. Thanks mate.
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  Speaker 4: That's Jared Kerr Qewibank chief Economist.
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