Mini-Hoon: Jarrod Kerr on how low the OCR may have to go

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

Subscribe in full as a paying subscriber for more detail and analysis in the full video and podcasts that go out with my Daily Chorus email newsletters. Paying subscribers support my work being done in the public interest here, and via my appearances on other media such as RNZ & 1News. Paying subscribers also get early and full access to our webinars, our chat room, my morning ‘Early Bird’ post with the full ‘Picks n’ Mixes’ digests of news links, and can comment on articles.

Ka kite ano

Bernard

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit thekaka.substack.com/subscribe