Ryan Bridge: House prices no longer lead economic growth

So the OCR decision was largely as expected yesterday, but what the Reserve Bank made very clear is where they think growth will come from.

As we’ve spoken about on the show lately, house prices aren’t running away here like in Australia, bar Queenstown.

Mike's Minute: Still more questions to answer for the Reserve Bank

The mail I'm getting got a bit more official yesterday with Fitch suggesting they think the Reserve Bank isn't done.

A lot of people thought the Reserve Bank was done cutting because fill-in Governor Christian Hawkesby basically said as much last week.

Perspective with Heather du Plessis-Allan: Is there a positive side to this recession?

Can I give you a positive spin on the recession that we're just coming out of?

I mean, maybe it's not so much a positive spin, but maybe it's an explanation for why this recession was harder than it needed to be - but why it actually did need to be this hard.

Ryan Bridge: What we got from the RBNZ yesterday

So what do we know today that we didn't know yesterday after the big show from the Reserve Bank?

Well not much, really.

Perspective with Heather du Plessis-Allan: Today's OCR cut comes better late than never

Good news - the Reserve Bank has finally done the thing many of us thought was necessary, and they've gone for a double cut in the OCR of 50 basis points.

That's the good news. The bad news is that they've been forced to do it because they didn't do it earlier, as in, they haven't cut as quickly as they should have.

Michael Reddell: Reserve Bank meeting the PM

There has been a flurry of coverage in the last couple of days after the Prime Minister told an interviewer yesterday not only that he thought the Reserve Bank should have cut the OCR by more/earlier, but that he had made this point to the Governor in a meeting with the Bank before the final OCR decision was made last week.

Mike's Minute: Luxon finally told it as it is

Has the penny dropped?

There was no shortage of headlines and news coverage yesterday out of our interview with the Prime Minister on the Reserve Bank.

In a nutshell, Luxon suggested Christian Hawkesby blew it and should have/could have moved faster on the cash rate.

Ryan Bridge: What the OCR says about the state of our economy

Remember just a few weeks ago how Sir John Key wanted 100 point cut from Reserve Bank?

We'll, they've almost given him what he wants.

It's easy to be an armchair critic of the boffins down at Number 2 The Terrace - "They should have gone for 50." "Club 25 was too cautious."

Mike's Minute: We were more right than the Reserve Bank

There are two key things for me that came out of the Reserve Bank commentary.

The press conference post the announcement should be a must watch for us all – the insight is invaluable.

On one hand, the genius three who turned up —Karen, Paul, and Christian— tell us that what they have done will flow through.

David Farrar: OCR down to 3.75%

The Reserve Bank has dropped the OCR to 3.75%, which is good. However this is still higher than anytime from 2009 to 2021.

Professor Robert MacCulloch: A Comment on Chief Crazy Horse Reserve Bank of NZ's Official Cash Rate Cut Today

I did Radio NZ's Morning Report commenting on the Reserve Bank's expected rate cut today. It says, "A Reuters poll of 33 economists had 32 expecting the RBNZ to slash the official cash rate by 50 basis points on Wednesday, bringing the rate down to 3.75 percent. Economist and professor at Auckland University Robert MacCulloch spoke to Corin Dann". You can listen to it by clicking this link. Dann characterizes my position that the so-called "neutral rate of interest" (where inflation is neither increasing or decreasing) is about 4% as out-of-line. He said in latter comments on Morning Report that the RBNZ says the neutral rate is more likely about 3%, so it can keep cutting without igniting inflation. Note that you can not directly observe the neutral rate. It is an academic concept.

Ele Ludemann: Bring back Brash?

Six years with a Labour government showed very clearly that more spending isn’t always better spending.

It’s a lesson the Reserve Bank doesn’t appear to have learned:

Capitalist: Take a Bow

It is a pity I gave up drinking (again) back in October, as a smug, priggish, celebration is in order and the Taieri Plains tap water doesn’t quite give the same buzz as Jack Daniel’s.

First I warned that numerous economic and financial indicators were heading in the wrong direction: it’s come true. Then I warned that in Australia (and elsewhere) nobody is investing in New Zealand because they are mystified by all the Māori stuff and worried about property rights. Right on cue the Māori Party leaders have shown foreign (and domestic) investors their money is most definitely not safe in New Zealand any longer.

Point of Order: Buzz from the Beehive - 11/10/24

Hurrah – the RBNZ has lowered interest rates, but then the Crown accounts put a stopper on any celebrating with champagne

Finance Minister Nicola Willis was sounding chipper on Wednesday, after the Reserve Bank cut the Official Cash Rate (OCR) to 4.75 per cent – this was “welcome news” for families and businesses, she enthused

Michael Reddell: Bits and pieces

As the executive members of the Reserve Bank’s MPC have fanned out in an attempt to put a favourable gloss on what everyone else recognises as a really sharp change of view between May and July/August (call it a U-turn or a flip-flop, or just a change a view sharper in a short space of time than ever seen from the Reserve Bank absent an exogenous external shock) there have been various rather dubious attempts to rewrite history.

Professor Robert MacCulloch: Setting the OCR

Should a Key Member of the RBNZ's Monetary Policy Committee (MPC) not Turn Up to Set the OCR (During School Holidays)?

Yes, its school holidays at present. The Reserve Bank's MPC meets only several times a year to do the hugely important task of setting interest rates. We're presently in the middle of a recession that, in the words of the RBNZ Governor, was "engineered" by the Bank, costing the livelihoods of millions of Kiwis. The high inflation we're experiencing was largely caused by the RBNZ as it unnecessarily printed $50 billion, flooding NZ with liquidity during 2020-22.

Kerre Woodham: Are you starting to feel more confident?

Well, did we get some good news with the Reserve Bank's report yesterday? Not as full as their OCR statement that we're expecting in August, but an update nonetheless. Is the long winter of our financial discontent about to be made glorious summer? Will the Reserve Bank ease its restrictive monetary policy this year so that we don't all have to survive to 25, we can thrive in 25, giving those who are paying mortgages and business loans some respite?

Michael Reddell: Flip flop flip flop

The Reserve Bank’s Monetary Policy Committee yesterday delivered their latest OCR review.

In my post on Tuesday, in which I suggested that an OCR cut was appropriate now, I’d noted

Michael Reddell: Still avoiding responsibility

I was away when Reserve Bank chief economist Paul Conway gave his recent speech, “The road back to 2% inflation”, and since I didn’t see any material commentary on it I didn’t bother going back to it when I got home. But my son – honours student researching monetary policy (anyone wanting a young economist at the end of year, get in touch…..) – prompted me to finally do so. And since I’ve been quite consistently critical of the lack of serious speeches from the MPC members, I shouldn’t overlook the handful (even if they are just selling a party line, rather than really opening up issues and alternative perspectives) that do emerge.

Michael Reddell: Comparing Treasury and Reserve Bank forecasts

I put a range of charts on Twitter late last week illustrating why, from a macroeconomic perspective, I found the government’s Budget deeply underwhelming. I won’t repeat them but will just show two here.

The first is the Treasury’s estimate of how the bit of the operating deficit not explained just by swings in the economic cycle change from 2023/24 (which was largely determined by last year’s Labour Budget) to 2024/25 (influenced by this year’s Budget choices)