NZ Herald Business Editor-at-large Liam Dann is joined by economists Shamubeel Eaqub and HSBC's Paul Bloxham for the first edition of 'The Economy Hub' - a weekly look at economics. Today we talk dairy doom, markets meltdown and the Reserve Bank.
The Reserve Bank has got it wrong on interest rates, one of the country's leading economists has said.
In an interview on the newly launched NZ Herald panel show The Economy Hub, Shamubeel Eaqub said the bank had consistently misread the inflation situation.
"They've wanted to raise rates over and over again," he said.
The reluctance they were now showing to cut rates further showed that they are putting too much emphasis on the risk of inflation.
There was too much saving in the world and not enough investment.
"We are demand deficient and central banks' ways of trying to pump demand have been to cut interest rates to zero," he said. "Now we've reached territory where central banks are experimenting with negative interest rates. The Swedish have negative rates, the ECB has cut to negative rates and Japan has followed that path as well. And that is a strange world to be in."
Australian based Bloxham was the economist who dubbed New Zealand a rock star economy in 2014.
"You certainly were a rock star back then but you are still doing quite well considering the global back drop - considering we've seen equity markets fall across the world, China is slowing and dairy prices are falling, growth here is doing OK," he said.
The Economy Hub is a new weekly video panel show addressing big economic issues with a panel of top economists and analysts.
