Nicola Willis: Finance Minister on the GDP dropping 0.9%, a new Reserve Bank Governor

Finance Minister Nicola Willis says a new Reserve Bank Governor will be announced “very shortly” as she comes under growing pressure to tackle New Zealand’s economic woes.

Economists are calling on the Reserve Bank to cut the Official Cash Rate more aggressively after yesterday’s shock GDP result.

New Zealand’s gross domestic product (GDP) fell by 0.9% in the June quarter, a reduction well over market expectations.

Expectations were for a 0.4% decline in GDP, while Reserve Bank forecasts were for a 0.3% drop.

The worse-than-expected outcome could mean the Reserve Bank will cut its Official Cash Rate (OCR) more aggressively than was previously thought, economists said.

In an interview with Newstalk ZB’s Mike Hosking this morning, Willis was asked what she expects from the Reserve Bank to address the situation.

“I will very shortly be announcing a new governor for the Reserve Bank. Obviously, we’ve had a chair change at the Reserve Bank. We are refreshing that institution and I think that is very good indeed,” Willis said.

She would not give a specific date for the announcement, instead describing it as happening “very shortly”.

She confirmed she knew who the new Governor is.

Christian Hawkesby is the current Acting Governor of the Reserve Bank. He was appointed to a six-month term in April following Adrian Orr’s resignation in March.

Willis told Hosking Kiwis shouldn't get down about the latest drop in GDP and we mustn't talk our way into a recession.

She says we shouldn't overreact to a bad quarter – we've got to keep playing the full game, dig in, and do the things that are needed to grow the economy.

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