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Speaker 1: The Reserve Bank has finally dropped a double cuts, taking

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Speaker 1: the official cash rate to two point five percent. The

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Speaker 1: bank says it's also open to further reductions. Jared Kerr

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Speaker 1: is key we Bank's chief economist.

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Speaker 2: Hi, Jared, good evening.

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Speaker 1: I mean some of us were expecting it, but it's

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Speaker 1: still surprising.

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Speaker 2: Were you surprised, No, we weren't. We thought it was

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Speaker 2: needed and the Reserve Bank has finally sort of realized that, Yeah, hey,

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Speaker 2: look we need to take in straight into stimatory territory

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Speaker 2: and here we are.

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Speaker 1: Will it give us the confidence to spend like they

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Speaker 1: hope it will.

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Speaker 2: It'll certainly help. Yeah, it'll certainly help, and we expect

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Speaker 2: things to pick up over summer as a result of

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Speaker 2: these rate cuts. Yeah.

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Speaker 1: Are you still expecting twenty five in November?

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Speaker 2: Heah, we are. I don't think the job's done just

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Speaker 2: quite just yet. It'd be great to get the cash

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Speaker 2: right down to two and a quarter and then we'll

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Speaker 2: think about whether we need it to go down to

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Speaker 2: two in February. It'll all come down the house. Things

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Speaker 2: play out over summer.

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Speaker 1: Are you seeing this as an acknowledgment that they got

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Speaker 1: it wrong?

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Speaker 2: Yeah? Yeah, they told us they didn't need to cut

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Speaker 2: further earlier in the year, and here they are cutting further.

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Speaker 2: So it's disappointing that this two and a half percent

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Speaker 2: cash rate wasn't delivered six months ago because it would

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Speaker 2: have fed through by now. But we've got it today

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Speaker 2: and it's going to feed through over the next six months.

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Speaker 1: So would you because we had a double cut in

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Speaker 1: what was it, February? So would you have actually double

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Speaker 1: cut again in April?

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Speaker 2: Yeah? Absolutely, that's what we were calling for. We've been

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Speaker 2: calling for two and a half percent cash rates two years.

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Speaker 2: We knew it needed to go below neutral, which is three,

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Speaker 2: and we needed to get some stimulus into the economy

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Speaker 2: to really ignite the recovery. We haven't got it. The

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Speaker 2: economy is still spluttering. We're still in a recession, and

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Speaker 2: that just shouldn't have been the case.

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Speaker 1: Some say that this double cut may in fact spook

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Speaker 1: people because people are already so nervous. What are the chances?

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Speaker 2: No, I don't believe in that at all. I think

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Speaker 2: people will take it for what it is. They'll see

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Speaker 2: their mortgage rates falling, they'll see their business lending rates falling,

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Speaker 2: and there'll be a sigh of relief. You know, it'll

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Speaker 2: free up cash for them to do what they haven't

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Speaker 2: been able to do up until now.

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Speaker 1: So, Jared, what are you picking for the economy next year?

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Speaker 2: Look, we think we get the recovery which we should

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Speaker 2: have got this year. We think we'll see growth of

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Speaker 2: around one to two percent next year, so a significant

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Speaker 2: improvement and what we've had, and then you know, things

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Speaker 2: will continue into two thousand and seven as we sort

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Speaker 2: of pick ourselves up off the ground.

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Speaker 1: Good stuff, Jared, thanks very much appreciated. Jared Kirky, we

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Speaker 1: Bank's chief economist who has actually been right the whole

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Speaker 1: way through here the wind does the new boss of

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Speaker 1: the rbnz's dot Mark. I think she starts in December,

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Speaker 1: but her first call will be in I think the

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Speaker 1: new year. For more from Hither Duplessy Allen Drive, listen

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