We cooled our jets. So where's our rate cut?

Despite high population growth, the latest GDP figures are worse than many economists, and the RBNZ, were expecting, as consumers deal with higher mortgage costs. Photo: Lynn Grieveson / The Kākā

TL;DR: Aotearoa-NZ’s economy contracted unexpectedly in the September quarter, unleashing further falls in wholesale mortgage rates that mean banks could (should?) start cutting fixed mortgage rates before Christmas. (See more in updated charts of the day below)

Elsewhere in the news this morning:

• The new Government’s decision to scrap the Clean Car Discount discount scheme it calls the ‘ute tax’ is likely to cost the nation up to $900 million in extra fuel import costs and the Government up to $680 million in extra carbon credit costs because the decision is expected to reduce electric car numbers by up to 350,000 and increase emissions by up to 3 million tonnes; Drive Electric

• MSD is finally prosecuting larger numbers of Covid wage subsidy fraud after years of complaints it has pursued beneficiaries much more aggressively than businesses that fraudulently and needlessly claimed and retained hundreds of millions of dollars; 1News Katie Bradford

• Claims of treaty breaches are being lodged with the Waitangi Tribunal over the new Government’s moves to dismantle Te Aka Whai Ora and repeal smoke-free rules; 1News, 1News

• First Union, 350 Aotearoa and the Council of Trade Unions published research yesterday showing for every dollar the four gentailers invest in new renewable capacity, $2.41 is paid out to shareholders in dividends.

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Chart of the day

The banks are sitting on 100 bps of extra profit margin. For now.

Alex Sinton

The Fed pivoted yesterday to signalling lower rates next year. Real interest rates are now rising quite quickly.

The US Federal Reserve yesterday surprised global financial markets by pivoting to forecast 75 basis points of cuts next year. Wholesale interest rates fell sharply, both globally and in Aotearoa-NZ. Alfonso Peccatiello via .The Macro Compass is excellent on this.

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COP28 cartoons of the day

Ya gotta laugh

Guy Venables via X

Banx via FT and X

Ben Jennings via The Guardian and X

Photo: Lynn Grieveson

Ka kite ano

Bernard