Mini-Hoon: Jarrod Kerr on how low the OCR may have to go
Description
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
00:00 Reserve Bank’s Decision on Cash Rate
02:57 Impact of Interest Rate Cuts on the Economy
06:07 Housing Market Dynamics and Economic Growth
08:52 Market Reactions and Future Projections
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Ka kite ano
Bernard
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