1 00:00:00,480 --> 00:00:02,960 Speaker 1: So good economic news for US today. GDP is up 2 00:00:02,960 --> 00:00:04,600 Speaker 1: by even more than we thought it would be. The 3 00:00:04,680 --> 00:00:07,800 Speaker 1: economy grew zero point eight percent in the first quarter 4 00:00:07,840 --> 00:00:10,960 Speaker 1: of the CNL. Unfortunately, most commentators don't think quarter two, 5 00:00:10,960 --> 00:00:12,800 Speaker 1: the one we're in right now, will be quite so good. 6 00:00:13,039 --> 00:00:17,319 Speaker 1: Jared kurrs Kiwibank's chief economist, Hi Jarrett, Hi, did you 7 00:00:17,360 --> 00:00:18,239 Speaker 1: take some heart from this? 8 00:00:19,520 --> 00:00:21,439 Speaker 2: Oh? Look at a good report. It showed we had 9 00:00:21,440 --> 00:00:24,680 Speaker 2: a bit of momentum coming into the year. Shows the 10 00:00:25,079 --> 00:00:28,880 Speaker 2: primary sector, you know, farmers are doing well. But as 11 00:00:28,920 --> 00:00:31,920 Speaker 2: you suggested, just before, it's the second quarter where things 12 00:00:31,920 --> 00:00:32,879 Speaker 2: start to unravel. 13 00:00:33,280 --> 00:00:35,640 Speaker 1: Yeah, what about before we go into the second quarter? 14 00:00:35,760 --> 00:00:37,960 Speaker 1: What about the fact that we actually thought the first 15 00:00:37,960 --> 00:00:41,000 Speaker 1: time it feels like ages saw the capita GDP rising 16 00:00:41,040 --> 00:00:42,880 Speaker 1: by zero point five percent. How much heart should we 17 00:00:42,880 --> 00:00:43,320 Speaker 1: take from that? 18 00:00:44,240 --> 00:00:45,960 Speaker 2: Yeah, it's good. Like I said, it was a good 19 00:00:45,960 --> 00:00:49,519 Speaker 2: report for the first quarter. You know, it's nice to 20 00:00:49,560 --> 00:00:54,800 Speaker 2: see parts of the economy growing again. So yeah, look, 21 00:00:54,800 --> 00:00:57,080 Speaker 2: we think it's a good report. Yeap. 22 00:00:57,200 --> 00:00:59,960 Speaker 1: Okay, So, as you say, second quarter not looking so flash. 23 00:01:00,040 --> 00:01:02,880 Speaker 1: So taking those two things combined, what does this mean 24 00:01:02,920 --> 00:01:04,280 Speaker 1: for the next Reserve Bank meeting? 25 00:01:05,319 --> 00:01:07,840 Speaker 2: Yeah? So the data that we talked about was for 26 00:01:07,880 --> 00:01:13,240 Speaker 2: the first quarter. Obviously, it predates Trump's tariff announcements, which 27 00:01:13,240 --> 00:01:16,679 Speaker 2: have thrown a whole lot of uncertainty into the air, 28 00:01:17,200 --> 00:01:20,240 Speaker 2: and it also predates the recent spike on oil prices. 29 00:01:20,319 --> 00:01:25,280 Speaker 2: So all of this is having attacks on consumers around 30 00:01:25,319 --> 00:01:27,640 Speaker 2: the world and here in New Zealand. You know, food 31 00:01:27,680 --> 00:01:31,080 Speaker 2: prices are up, energy prices are up, and now petrol 32 00:01:31,120 --> 00:01:35,800 Speaker 2: prices will rise. So that's going to stretch household budgets 33 00:01:35,840 --> 00:01:36,400 Speaker 2: even further. 34 00:01:36,800 --> 00:01:38,319 Speaker 1: So what do you think, do we get a cut? 35 00:01:39,720 --> 00:01:42,320 Speaker 2: Oh, we need a cut, we need three. In fact, 36 00:01:43,440 --> 00:01:48,120 Speaker 2: the Reserve Bank absolutely, I think that the interest rates 37 00:01:48,120 --> 00:01:52,280 Speaker 2: sensitive parts of the economy haven't recovered and they're really struggling, 38 00:01:53,520 --> 00:01:58,600 Speaker 2: and we need support. We need an economy running closer 39 00:01:58,600 --> 00:02:01,960 Speaker 2: to its capacity. We're well below that at the moment, 40 00:02:02,320 --> 00:02:06,440 Speaker 2: and I think it proves that interstrates just haven't, Okay, Jared, 41 00:02:06,560 --> 00:02:07,360 Speaker 2: really had an impact. 42 00:02:07,400 --> 00:02:08,880 Speaker 1: I mean, I agree with you on that, but that 43 00:02:08,960 --> 00:02:10,840 Speaker 1: is actually not the Reserve Bank's job, right. The Reserve 44 00:02:10,840 --> 00:02:13,120 Speaker 1: Bank's job is to deal with inflation. Inflation is creeping 45 00:02:13,160 --> 00:02:14,679 Speaker 1: up towards the top of the band. Can they take 46 00:02:14,720 --> 00:02:15,160 Speaker 1: that risk? 47 00:02:16,400 --> 00:02:18,640 Speaker 2: So that's a short term thing, so we think inflation 48 00:02:18,800 --> 00:02:22,960 Speaker 2: spikes now basically, but over the medium term it's headed 49 00:02:23,000 --> 00:02:25,480 Speaker 2: back to two and on our forecast it actually falls 50 00:02:25,520 --> 00:02:30,600 Speaker 2: below too. So we're concerned about the medium term and 51 00:02:30,760 --> 00:02:33,920 Speaker 2: that is their mandate inflation over the medium term, and 52 00:02:33,960 --> 00:02:37,920 Speaker 2: it's falling hither, it's heading south, so I think they 53 00:02:38,000 --> 00:02:41,720 Speaker 2: should be a bit more proactive and get they're currently 54 00:02:41,800 --> 00:02:42,440 Speaker 2: running again. 55 00:02:42,520 --> 00:02:44,399 Speaker 1: Good stuff, Jered, Always good to talk to you. Thanks mate. 56 00:02:44,400 --> 00:02:48,600 Speaker 1: That's Jared Kerr Qewibank chief Economist. For more from Heather 57 00:02:48,720 --> 00:02:51,760 Speaker 1: Duplessy Allen Drive, listen live to news Talks it'd be 58 00:02:51,880 --> 00:02:55,760 Speaker 1: from four pm weekdays, or follow the podcast on iHeartRadio.