In an interview with Newstalk ZB\u2019s Mike Hosking this morning, Willis was asked what she expects from the Reserve Bank to address the situation. <\/p>\n
\u201cI will very shortly be announcing a new governor for the Reserve Bank. Obviously, we\u2019ve had a chair change at the Reserve Bank. We are refreshing that institution and I think that is very good indeed,\u201d Willis said.<\/p>\n
Finance Minister Nicola Willis during the press conference in her Beehive office, Parliament, Wellington. Photo \/ Mark Mitchell<\/p>\n
She would not give a specific date for the announcement, instead describing it as happening \u201cvery shortly\u201d.<\/p>\n
She confirmed she knew who the new governor is.<\/p>\n
Christian Hawkesby is the current Acting Governor of the Reserve Bank. He was appointed to a six-month term in April following Adrian Orr\u2019s resignation in March.<\/p>\n
Key takes aim at Reserve Bank<\/p>\n
Former Prime Minister Sir John Key has backed Willis\u2019 finance leadership and directed blame towards the Reserve Bank.<\/p>\n
\u201cThe person that\u2019s not doing the job or the people that are not doing their job are the Reserve Bank,\u201d Key told Newstalk ZB\u2019s Mike Hosking.<\/p>\n
Former Finance Minister Roger Douglas yesterday called for Willis to resign, but Key said she shouldn\u2019t lose her \u201dnerve\u201d.<\/p>\n
\u201cShe worked for me. I know Nicola very well and she\u2019s outstanding.<\/p>\n
\u201cI think what you\u2019ve seen over the last 18 months or so is a Government that has been working hard to get the economy straightened up after, frankly, the mess it inherited. <\/p>\n
\u201cBut it hasn\u2019t had a mate in the Reserve Bank.\u201d<\/p>\n
Key said the country needs to get its \u201cmojo\u201d back, and policy changes to the Resource Management Act and the foreign buyers ban would help.<\/p>\n
\u201cThis is a very unusual period in New Zealand history because this has been the one that you\u2019ve seen a very significant pullback in housing in Auckland and Wellington.<\/p>\n
\u201cAll these people who hate housing… it\u2019s slowed down the construction sector, and you can see those numbers yesterday. And the second thing is, because people feel like they\u2019re going backwards in their biggest asset, it strips them of confidence.\u201d<\/p>\n
Former Prime Minister Sir John Key. Photo \/ Greg Bowker Visuals<\/p>\n
GDP data \u2018ugly\u2019 – economist<\/p>\n
ASB senior economist Mark Smith said economic predictions for quarter three would likely change in response to this week\u2019s GDP result.<\/p>\n
\u201cWe saw quite a pretty strong start to the year, and really what we saw in Q2 was very much an unwinding of those things, and it happened a lot more significantly than what we thought. <\/p>\n
\u201cWhat we\u2019re seeing now is that the economy does not really have a lot there that can really push it up, apart from really monetary policy.\u201d <\/p>\n
Smith said he thinks the Reserve Bank\u2019s focus has been on reducing inflation, but the Reserve Bank can now cut the OCR strongly because there is confidence that inflation will be lower \u201clater down the track\u201d.<\/p>\n
\u201cThe focus is now on the labour market rather than inflation.<\/p>\n
\u201cWe think the Reserve Bank will need to put the foot on the gas pedal to try and get the economy going. <\/p>\n
\u201cPreviously, when inflation was too high, the foot was on the brake, and now the foot will need to go on the gas pedal.\u201d<\/p>\n
Smith said floating mortgage rates will move down by quite a margin, and there might be a small reduction in fixed rates.<\/p>\n
Stats NZ said the quarterly decline was driven by manufacturing, down 3.5% and construction, down 1.8%.<\/p>\n