As business confidence improves, Prime Minister Christopher Luxon wants the RBNZ to take more frequent OCR decisions.
Luxon says he wants to see interest rate reductions continue on the back of low inflation.
He made the remarks in a question-and-answer session with former National Party leader Simon Bridges after making a major speech yesterday on the Government’s economic growth plan to the Auckland Business Chamber, which Bridges now heads.
Bridges has recently made it clear he wants the Government to focus not just on fiscal issues but apply more energy to encouraging and, if necessary, incentivising growth.
He says there should be only two possible decisions on the table at the next RBNZ meeting, either a 0.50% or 0.75% cut.
Luxon says he will “leave that for someone else to think through”. However, he did say the RBNZ’s monetary policy committee should meet more frequently to make interest rate decisions. During the year it meets about every six weeks.
“We've got to get ourselves out of the three-year recession and into a steady pathway of economic growth that will continue to build as we go into 2026.”
“We've got to get ourselves out of the three-year recession and into a steady pathway of economic growth that will continue to build as we go into 2026.”
While he respects the independence of the Reserve Bank, the Prime Minister says, “frankly, if they met a little more regularly that would be helpful”.
“Rest assured the Reserve Bank is on watch the whole time. Whilst we have scheduled meetings we can meet at any point. At this point we don’t think we have to … but we have done that in the past,” he told reporters.
“This bank does not close over summer. In fact, it has some of its busiest periods … we do not just shut the door and come back on February 19th”.
Last year, Orr laid the ground for the monetary policy committee’s thinking over the nearly three months until its next meeting on 19 February by indicating a 0.50% OCR cut was on the cards.
Importantly, annual inflation has stayed at 2.2% for the year to December and economists say this means the RBNZ’s indicated OCR cut remains on the table.
“Measures of core inflation (which track the underlying trend in consumer prices) have continued to trend down towards the RBNZ’s target range,“ Satish Ranchhod, a Westpac senior economist says.
