{"id":24315,"date":"2025-09-18T20:19:07","date_gmt":"2025-09-18T20:19:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/il\/24315\/"},"modified":"2025-09-18T20:19:07","modified_gmt":"2025-09-18T20:19:07","slug":"reserve-bank-under-pressure-to-slash-interest-rates-following-shock-gdp-drop","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/il\/24315\/","title":{"rendered":"Reserve Bank under pressure to slash interest rates following shock GDP drop"},"content":{"rendered":"

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

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

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

Per capita GDP fell by 1.1% in the quarter. The fall followed a revised 1.2% rise in GDP in the March quarter.<\/a><\/p>\n

Kiwibank chief economist Jarrod Kerr said the data was \u201cugly\u201d and showed the Reserve Bank hadn\u2019t done its job.<\/p>\n

\u201cWe shouldn\u2019t be seeing contractions like this a year out from what was a severe recession last year. We should be recovering by now.<\/p>\n

\u201cTen out of the 16 industries that we measure are in contraction again. This is very, very prolonged and frustrating recovery, and businesses are fed up.\u201d<\/p>\n

Kerr said the central bank needed to lower the OCR from 3% to 2.5% as soon as possible.<\/p>\n

\u201cWe need the Reserve Bank to show some signs of leadership rather than simply following outdated data.\u201d<\/p>\n

ASB chief economist Nick Tuffley said the contraction was more substantial than expected, including in areas like manufacturing.<\/p>\n

\u201cWe do expect to see a degree of rebound coming through, but we\u2019ve seen some pretty mixed signs so far.<\/p>\n

\u201cWe\u2019ve seen some indications that card spending has lifted, but surveys of businesses are looking pretty patchy at this point.<\/p>\n

\u201cIt\u2019s very early days in getting a sense with what\u2019s happening in the export sector, but we can see tourism momentum has already been slowing this year and you\u2019ve still got the question marks about the tariff impacts to come through.\u201d<\/p>\n

Jaime Lyth is a multimedia journalist for the New Zealand Herald, focusing on crime and breaking news. Lyth began working under the NZ Herald masthead in 2021 as a reporter for the Northern Advocate in Whang\u0101rei. <\/p>\n","protected":false},"excerpt":{"rendered":"In an interview with Newstalk ZB\u2019s Mike Hosking this morning, Willis was asked what she expects from the…\n","protected":false},"author":2,"featured_media":24316,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[21132,5596,114,21924,21919,16770,184,268,21917,3153,21921,21925,85,6203,46,9077,21920,16773,6204,5612,21047,21918,21923,21916,21926,273,9060,21922,7574,10706,21927,9564],"class_list":["post-24315","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-announced","tag-bank","tag-business","tag-comes","tag-drop","tag-economic","tag-economy","tag-finance","tag-following","tag-gdp","tag-governor","tag-growing","tag-il","tag-interest","tag-israel","tag-minister","tag-nicola","tag-pressure","tag-rates","tag-reserve","tag-says","tag-shock","tag-shortly","tag-slash","tag-tackle","tag-to","tag-under","tag-very","tag-will","tag-willis","tag-woes","tag-zealands"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/24315","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=24315"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/24315\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/24316"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=24315"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=24315"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=24315"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}