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Speaker 1: Afternoon. The ocr has been cut. It's come down twenty

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Speaker 1: five basis points to three percent, and the new projection

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Speaker 1: is it'll be cut a couple more times to two

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Speaker 1: and a half percent. Now the Reserve Bank thinks we're

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Speaker 1: through the worst with the recession, but didn't agree amongst

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Speaker 1: themselves on how much to cut. Most of the committee

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Speaker 1: today voted for twenty five basis points, but two of

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Speaker 1: them voted for a double cut. Christian Hawksby is the

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Speaker 1: acting Reserve Bank governor high Christian good what makes you

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Speaker 1: think that the worst is over?

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Speaker 2: Because we've got with lowered interest rates a long way now,

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Speaker 2: we've sent out a pretty strong signal that we're willing

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Speaker 2: to lower them further as required. We've got other drivers

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Speaker 2: of the economy like high commodity prices, and when you're

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Speaker 2: add that all up, we think that Q two was

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Speaker 2: a bit of a bit of a blippin. With that support,

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Speaker 2: we should be coming out at the other end around now.

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Speaker 1: How long before it feels better though, because I've been

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Speaker 1: speaking to some people who are in business who think

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Speaker 1: it might not be until the start of twenty seven.

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Speaker 2: Absolutely, you know, just acknowledge also that it's a real

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Speaker 2: two speed economy at the moment, and it does depend

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Speaker 2: on who you talk to what part of the country.

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Speaker 2: The regions are doing much better than the cities, particularly

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Speaker 2: Auckland and Wellington are doing it tough at the moment.

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Speaker 2: Some of the data is actually picking up in July,

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Speaker 2: so we are seeing some of that data pick up.

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Speaker 2: It might not feel like it's roaring through the middle

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Speaker 2: of this year, but by the end of this year

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Speaker 2: and into the beginning of next year, we think it

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Speaker 2: will okay.

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Speaker 1: Do you think you made a mistake not cutting in July.

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Speaker 2: No, we just you know, we're always reassessing the economy

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Speaker 2: and where things are at. We saw early signs, you know,

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Speaker 2: that things were faltering, and we sent to a signal

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Speaker 2: in July that although we didn't cut, we were open

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Speaker 2: to it.

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Speaker 1: Shouldn't you have I mean, if you could see that

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Speaker 1: things were faltering and you've cut now, you should have

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Speaker 1: cut in July.

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Speaker 2: The beauty of monetary policy as we meet every six weeks,

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Speaker 2: and that means, you know, we can change course, and

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Speaker 2: we've changed course significantly. In August, we'll put out an

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Speaker 2: o CR projection which is significantly down on May, and

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Speaker 2: that's really provided a strong signal that interest rates are

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Speaker 2: falling in there to support the economy.

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Speaker 1: Were you in the camp twenty five basis points or

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Speaker 1: fifty basis points?

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Speaker 2: We don't disclose who voted what, but as chair of

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Speaker 2: the committee, I speak to you know the outlock and

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Speaker 2: the risks and where we landed collectively.

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Speaker 1: I think you've made a mistake not going for fifty.

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Speaker 1: Do you think I'm wrong?

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Speaker 2: Oh? Look, we had two members who were in your

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Speaker 2: camp and their views were I think all of us

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Speaker 2: acknowledged that there is a lot of there's both upside

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Speaker 2: and downside risk around our central outloock.

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Speaker 1: Tell me the upside risk, Christian, tell me what's the risk?

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Speaker 1: And having gone for.

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Speaker 2: The risk is that Q two was an aberration, that

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Speaker 2: it's a bit of a blip the economy kicks on.

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Speaker 2: But also you've got to remember that inflation is rising

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Speaker 2: and we're projecting CPI inflation to be at three percent.

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Speaker 1: Yes, but you know that you need to look through

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Speaker 1: it because what's happening to goldal economy will bring our

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Speaker 1: inflation down again.

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Speaker 2: That yes, and you've got onto the argument for the fifty.

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Speaker 2: The argument to do even no change is the risk.

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Speaker 1: No, never mind that I want you to tell me

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Speaker 1: why not fifty because fifty is obvious.

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Speaker 2: Two of our members voted for fifty and their view

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Speaker 2: was around providing that strong signal and getting that kickstart.

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Speaker 2: The reason not to do fifty is that by doing

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Speaker 2: twenty five and signaling putting out a forward track that

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Speaker 2: actually puts interest rates down to two and a half.

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Speaker 2: We send out a strong signal, we get marked at

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Speaker 2: rates moving which they have. Market rates have lowered because

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Speaker 2: we've surprised the markets today, and then we meet in

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Speaker 2: six weeks time and things will go bigger, running faster

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Speaker 2: or slower than the sum. Just adjust to that.

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Speaker 1: Here's the thing you're going to cut in six weeks,

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Speaker 1: So why not why not double cut today? This is

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Speaker 1: a fighting charms Christian. There are businesses falling over today

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Speaker 1: because of what is going on.

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Speaker 2: It feels different in different parts of the country, and

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Speaker 2: I think if we had we set interest rates for

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Speaker 2: Auckland and Auckland only, they'd probably be lower than where

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Speaker 2: we are. But we have to set interest rates for

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Speaker 2: the for the whole country. There are some parts of

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Speaker 2: the country that are doing quite well, and so we

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Speaker 2: just have to look at that an aggregate.

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Speaker 1: Christian, Thank you so much for your time and to

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Speaker 1: appreciate a Christian hawksby acting Reserve Bank Governor. For more

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