Last night I spoke with Kiwibank Chief Economist Jarrod Kerr last night after the RBNZ’s 50 basis point cut in the OCR. He says the cash rate may need to go under 2% to get the economy going again. Here’s his full note on the decision.
We talked about:
How interest rates need to be below neutral to encourage growth.
The housing market’s stagnation was concerning for overall economic health.
Whether communication from the Reserve Bank has led to confusion among businesses. Jarrod says it has.
A new governor at the Reserve Bank may bring better leadership.
The housing market is expected to recover slowly over the next few years.
Investors are waiting for mortgage rates to align with rental yields.
Whether Debt to income controls are currently a major constraint on the housing market. Jarrod says not.
Wholesale rates have fallen, indicating a positive market reaction.
The depreciation of the Kiwi dollar may boost tourism and exports.
Chapters
00:00Reserve Bank’s Decision on Cash Rate
02:57Impact of Interest Rate Cuts on the Economy
06:07Housing Market Dynamics and Economic Growth
08:52Market Reactions and Future Projections
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Ka kite ano
Bernard
