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Speaker 1: The only drive show you can try. Truck to ask

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Speaker 1: the question question again, the answers find a fag sack

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Speaker 1: and give the analysis. Here the duplicy Eland Drive with

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Speaker 1: one New Zealand and the power of satellite mobile newsags Envy.

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Speaker 2: Good afternoon.

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Speaker 3: The Reserve Bank has cut the official cash rate today

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Speaker 3: by a quarter of a percent. It is now sitting

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Speaker 3: at two point twenty five percent, the lowest in three years.

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Speaker 2: It reckons, this is the Reserve Bank. It reckons. Inflation

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Speaker 2: is not a problem.

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Speaker 3: The economy is already growing in the labor market is stabilizing.

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Speaker 3: Christian Hawksby is the outgoing governor high Christian gooday is

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Speaker 3: that at one and done, no more cuts.

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Speaker 4: We've put out an OCR projection which would have the

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Speaker 4: OCR will be consistent with the oceach bench unchanged over

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Speaker 4: two thousand in twenty six And we think that's a

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Speaker 4: good position to be in, having done a lot of

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Speaker 4: work over the course of this year a loosen policy

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Speaker 4: and starting to see it having in its effect.

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Speaker 3: And one of the things that you're taking into account

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Speaker 3: possible possibly is the fact that Kiwi's like, even this

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Speaker 3: cut may not be enough to get kiwis going ah.

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Speaker 4: That's the doubt, you know. The downside risk is that

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Speaker 4: households and businesses feel but battered and bruised still from

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Speaker 4: this year and are a bit cautious. Our fifty point

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Speaker 4: cut in October was you know, sort of designed to

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Speaker 4: a bit of a shot in the arm to address that.

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Speaker 4: So there is that risk still there. On the other side,

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Speaker 4: the recovery could be faster and stronger than we expect

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Speaker 4: because we have cut interest rates a long way and

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Speaker 4: it could really start coming through quite quickly.

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Speaker 2: I can't call it. What's your gut telling you.

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Speaker 4: I think we've we have done a lot of work.

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Speaker 4: I'm a true believer that monetary policy works. People have

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Speaker 4: their doubts, but it just does work its way through

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Speaker 4: all the different channels.

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Speaker 3: Can I put something to you. It's worked historically, right,

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Speaker 3: But the problem that's happened now is that you might

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Speaker 3: have cut the ocr and I've come off my rate

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Speaker 3: and I've refixed at a lower rate, but by the

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Speaker 3: same exactly the same time, my counsel is chucking up

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Speaker 3: my rates. So any free cash has been sucked up

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Speaker 3: in that again, isn't it.

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Speaker 4: There's lots of different channels through rich monetary policy works

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Speaker 4: you wealth channel, cash flow channel, the exchange rate channel.

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Speaker 4: You know, we're seeing we're so we're seeing it working.

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Speaker 4: The exchange rate one is one that people don't talk

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Speaker 4: so much about at the moment, but the key we

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Speaker 4: has weakend that's listing, you know, explore earning.

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Speaker 2: We want to put to you.

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Speaker 3: Is it possible that we are actually poorer than you

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Speaker 3: guys might anticipate, and that even the money that you

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Speaker 3: free up as being sucked up by bills, Like we

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Speaker 3: just don't have as much disposable cash as you might

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Speaker 3: think we do.

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Speaker 4: We we do have a lower potential growth rate of

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Speaker 4: the economy. Is what we've noticed that the productivity growth

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Speaker 4: is pretty weak, population growth is pretty weak, so we

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Speaker 4: kind of need to be realistic about how fast the

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Speaker 4: economy can grow in the future. But what we're seeing

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Speaker 4: as a lot of spare capacity, and that's what's motivating

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Speaker 4: us to go, Okay, we can have low interest rates

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Speaker 4: because we can have an economy that's running hotter for

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Speaker 4: a while to close that gap.

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Speaker 3: Okay, So I mean you talk to the business leaders,

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Speaker 3: they say they're seeing green shoots. When do you think

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Speaker 3: we start really feeling it properly?

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Speaker 4: Well, we've got a positive Q three and Q four,

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Speaker 4: and you know, once you get into you know, further

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Speaker 4: on beyond that, you're looking at about kind of a

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Speaker 4: three percent per annum type run rate as the effect

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Speaker 4: of lower interest rates kick in. So the answer is,

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Speaker 4: the recovery is happening right now. It's just that we

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Speaker 4: won't see the official Do.

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Speaker 2: You think they're feeling it yet.

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Speaker 3: About Christian.

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Speaker 4: It's early days in terms of it. You know, it's

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Speaker 4: a positive quarter Q three. We look at high frequency data.

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Speaker 4: We've got a key wee GDP indicator that we update

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Speaker 4: all the time each time a new bit of data

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Speaker 4: comes out. You know, that's starting to show it. So

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Speaker 4: it's it's not about waiting for something to happen. It's

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Speaker 4: happening at the moment. It'll pick up through the next while, hope.

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Speaker 2: So okay, listen, have you met the new governor?

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Speaker 3: Yes, what do you reckon?

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Speaker 2: What's your take on her?

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Speaker 4: I think she will do a wonderful job. We've met

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Speaker 4: six times now. A big focus for me has been

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Speaker 4: supporting her induction and getting ready for the role. So

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Speaker 4: we've had a lot of discussions and you know, everything

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Speaker 4: and anything a new governor.

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Speaker 2: Might want to ask she asked you about Adrian.

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Speaker 4: Forward bucking. You know what's going a matter when you're

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Speaker 4: sitting in the seat.

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Speaker 3: First, I would like if you and I ever see

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Speaker 3: each other for a beer, I'm going to be like, right,

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Speaker 3: tell me everything.

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Speaker 2: This is the most fascinating thing. What do you off

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Speaker 2: to do?

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Speaker 4: By the way, I'm going to have a long break

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Speaker 4: over the summer. I've had a big job of being

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Speaker 4: focused on the finish line. Next next job is to

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Speaker 4: have a really good break and not turn my mind

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Speaker 4: to the future for as long as I can.

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Speaker 2: All Right, well, good luck with that, Christian hawksby outgoing

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Speaker 2: Reserve Bank Governor.

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