Perspective with Heather du Plessis-Allan: There's a gloomy note in the Reserve Bank decision

Heather du Plessis-Allan Drive

I don't really want to have to start on a bum note, but if there is a thing that we do on the show, it's honesty. So let's be honest about it.

What the Reserve Bank decision told you today is how much trouble our economy is in. If you're in business, you already know this and you don't need me to tell you this.

I was talking to a couple of CEOs yesterday. They were telling me they cannot see the green shoots - we've been waiting. We were told - survive til '25, we're halfway through and we're still stuffed.

Well, let me tell you what we got today. We got a 25 basis point cut. We needed 50 percent because that OCR is still too high. It's now sitting at 3.25 percent.

It's probably actively still dampening our economic growth because I think the consensus is that 3 is neutral, and we're not there yet.

But they could not give us a bigger cut today.

And even they must realize how much damage they're doing, because they themselves have admitted that the economy is even more stuffed than they thought it was as recently as February, when they last met.

Back in February, they predicted that in the first quarter of this year, we would have seen growth of 0.6 percent. They have revised that down to 0.4. This quarter that we're in right now, they forecast that we would be growing at 0.6 percent. They just halved that to 0.3 percent.

Next quarter, they thought would be 0.5 percent. They've taken that down to 0.2 percent. That's not good. That's bad.

And now, why couldn't they give us a bigger cut to help us along? Because they might set off inflation again if they do.

We just saw a rise in inflation the other day, and there is potential for it to keep on creeping up.

We've got dairy prices going up, we've got electricity prices going up, we've got rates going up - I could go on and on and on.

The Budget that we just had last week is not super deflationary, is it?

And their job at the Reserve Bank, remember, is not to help the economy grow. That is not their job. Their job is to contain inflation, and it's kind of borderline, and they can't take any chances there.

Could we have a touch of the old stagflation back? No growth, prices going up? Feels a bit like that's a risk at the moment, isn't it?

Now, I hope not, but 'I hope' is not a strategy.

And yet, what else have we got left when even the Reserve Bank can't get out of the economy's way?

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